December 6, 2022 12:00 AM | Covington Associates
December 6, 2022 (Boston, MA) – Covington Associates, a leading middle market investment bank announced its role as exclusive financial advisor to Surplus Solutions in the recapitalization of its business by NMS Capital.
Founded in 2006 and headquartered in Woonsocket, RI, Surplus Solutions is a leading provider of Equipment Lifecycle Management (ELM) services focused on procuring and reselling clinical laboratory and processing equipment from and to the biotechnology, pharmaceutical, and nutraceutical end-markets. Through its robust and actively cultivated network of sourcing relationships, the Company obtains clinical laboratory equipment across a wide array of sizes and use cases either via outright purchase or through consignment. This equipment is subsequently resold through various channels to a large and diverse buyer universe comprised of life sciences market participants in search of a solution to the various challenges associated with clinical laboratory equipment management and procurement.
As of 2022, the U.S. market for biopharma R&D, processing, and laboratory equipment was estimated to represent nearly $12bn in annual spend. Additionally, this market was projected to grow to over $20bn by 2027, a result of increased investment and activity within the drug and pharmaceutical development sector generally. Further, ELM providers like Surplus Solutions focus and specialize on the subset of this demand reserved for secondhand and used equipment, a subsector estimated to represent approximately 25% of the broader market. This increasing demand for equipment coupled with a shortage of viable solutions for inventory disposal represents the cross section wherein Surplus Solutions and other ELM providers operate.
“Surplus Solutions occupies a unique position within the broader life sciences equipment market, allowing us to address the needs of buyers and sellers alike in search of superior inventory management solutions,” said Joe D’Alton, Founder & President of Surplus Solutions. “Our partnership with NMS comes at a critical moment and inflection point in our Company’s history. Given NMS’ experience in the ELM space and their track record in working with founder-owned businesses, we are excited to execute upon Surplus Solutions’ next phase of growth with their support and assistance.”
“We are thrilled to partner with Joe D’Alton and the team at Surplus Solutions. The Company has separated itself as a leader within the equipment lifecycle management and outsourced pharmaceutical services arenas, two sectors we are intimately familiar with and focused on through NMS’ thematic investing approach,” commented David Peterson, NMS Managing Director. In 2021 NMS invested in DirectMed Parts & Service, a leading medical imaging parts, systems, and service company. “We are excited to work with the Surplus team to drive the next stage of the Company’s growth through geographic and inventory expansion, strategic M&A and investments in infrastructure, operations, and other key support functions.”
“Drug development and research has benefited from and grown in step with market tailwinds and increased investment within the broader life sciences sector. Market participants, though, still face challenges related to inventory management and equipment procurement including pricing pressures and supply chain troubles. Surplus’ business model addresses those challenges and positions the Company for continued market share capture as a result,” added Colin Durney, NMS Vice President.
The NMS deal team also included Kevin Jordan and Colin Moran. McDermott Will & Emery LLP provided legal counsel to NMS. Covington Associates LLC acted as financial advisor to Surplus Solutions while Duffy & Sweeney LLP provided legal counsel to the Company. Twin Brook Capital Partners LLC provided debt financing to support the transaction.
ABOUT COVINGTON ASSOCIATES
Covington Associates is an investment banking firm offering advisory services in the areas of mergers and acquisitions (“M&A”), capital raising and strategic advisory to middle-market companies across the Healthcare, Business Services, Consumer & Industrial, and Technology verticals. Founded in 1991 and based in Boston, the vision for Covington has been to provide clients with the highest caliber of senior-level attention and to remain an advice driven and results focused organization. Since its inception, Covington Associates has completed over 350 transactions globally for both private and publicly traded companies totaling over $30 billion. Further information can be found at https://www.covllc.com/our-firm-covington-associates..
ABOUT SURPLUS SOLUTIONS
Founded in 2006 and headquartered in Woonsocket, RI, Surplus Solutions is a leading provider of Equipment Lifecycle Management (ELM) services focused on procuring and reselling clinical laboratory and processing equipment from and to the biotechnology, pharmaceutical, and nutraceutical end-markets. For additional information on Surplus Solutions, please visit the Company’s website at www.ssllc.com.
ABOUT NMS CAPITAL
Founded in 2010, NMS Capital is an experienced private equity firm managing assets in excess of $1.5 billion. Since inception, NMS has partnered with management teams in over 115 investments and follow-on acquisitions across defined investment themes within the Business Services and Healthcare Services industries. The firm’s principal strategy is to create long-term value by providing strategic and operational resources to growth-oriented companies led by founders or experienced management teams. NMS has successfully built industry leading lower middle market companies in defensible and scalable end markets by accelerating organic and acquisition-driven growth. For additional information on NMS, please visit the firm’s website at www.nms-capital.com.
Surplus Solutions recapitalized by NMS Capital