Capstone Partners advised Petillo Incorporated, a Specialty Site Development Company, on its sale to Sterling Construction Company, Inc. (NasdaqGS: STRL).
Petillo is a leading specialty site development solution provider in the Northeast and Mid-Atlantic. Founded in 1994 by owner and CEO Michael Petillo, Petillo has seen compound revenue growth from 2017 to 2021 of 29% through continued expansion of its geographic footprint, customer base, and service offerings. Petillo works within both the commercial construction and private construction sectors and focuses largely on e-infrastructure projects.
Capstone was highly recommended to us and they brought Sterling to the table and completed a great transaction. They led the charge for us in this transaction in the face of COVID and a tight closing deadline.
This strategic deal positions Sterling to be an industry leader in E-infrastructure specialty site development and expands its geographic footprint to cover blue chip e-commerce customers in all major East Coast markets. Petillo and Sterling have a strong cultural alignment and together will create one of the largest specialty site development companies in the U.S.
The aggregate consideration of $195 million paid on the closing date (the “Base Purchase Price”) consisted of $175 million of cash and 759,447 shares of Sterling common shares valued at $20 million. Additionally, under the purchase agreement, upon achieving specified growth thresholds and certain other conditions, the sellers are entitled to earn-out payments of up to $20 million over the next five years. The Company also entered into a five-year employment agreement with Michael Petillo, which provides for five equal annual retention payments totaling $15 million.
“Petillo is a best-in-class business,” said Ted Polk, Managing Director at Capstone Partners. “They play a very important role at the front-end of a construction project and are regularly relied upon by the leading General Contractors in the Northeast.”
“We are excited to welcome the Petillo team, its culture, and capabilities into our E-infrastructure solutions sector,” said Joe Cutillo, Sterling’s Chief Executive Officer. “Their entrepreneurial spirit focused on delivering customer-centric solutions coupled with their geographic footprint will enable us to service our key blue-chip e-commerce customers up and down the entire East Coast with even more offerings than we had before. Petillo’s capabilities along with our current Plateau capabilities will not only create one of the largest specialty site development companies in the U.S. but will also add broader capabilities and service offerings to both end markets.”
Sterling Construction, Inc. is a Texas-based, market-leading infrastructure services provider of E-infrastructure Solutions, Building Solutions, and Transportation Solutions. The company operates through a variety of subsidiaries and specializes in heavy civil infrastructure construction and infrastructure rehabilitation, as well as residential construction projects. The company operates in three primary business segments: Residential construction, Heavy Civil construction—including highways, bridges, and other civil infrastructure projects—and Specialty Services construction, which includes services such as site development for large, blue-chip companies in the e-commerce, data center, distribution center, warehousing, and energy, sectors.