Odyssey Finds Profits In Restrooms

The porta-potty industry rarely, if ever, induces images of gold. Most people are loath to spend two minutes inside the tight confines of a portable toilet, let alone invest multiple years and millions of dollars into them. But Odyssey Investment Partners—a firm that did brave the sector—has proven that there’s money to be made.

After a three-year investment, New York-based Odyssey has agreed to sell portable restroom provider United Site Services Inc. (USS) to fellow private equity firm DLJ Merchant Banking Partners. Terms of the deal, expected to close in late June, were not disclosed.

USS provides portable sanitation services—mostly renting out portable restrooms—to the construction, government and special-event markets out of more than 40 locations throughout the U.S. Other services offered by the Westborough, Mass.-headquartered company include portable hand-washing sinks, temporary fencing, storage and power.

Odyssey Managing Principal Brian Kwait said the firm’s attraction to the portable restroom sector did not stem from a desire to boldly go where no buyout shop has gone before, but rather from an inclination to make a play in the rental services space.

“USS fit our industry criteria and it was already the leading player in a market with so many favorable conditions and opportunities,” Kwait said “We saw an opportunity to drive strong growth relatively quickly.” Between June 2003—when USS was acquired—and the present, the company’s EBITDA has quadrupled while its revenues grew threefold. Kwait, however, declined to disclose specific numbers.

Since its founding in 1999, USS has been quick to acquire its competition, which is how the company rose to become a national player. Odyssey continued working that strategy, consummating 18 tuck-in acquisitions—such as the buyouts of Boston-based Downtown Johnny, Branford, Conn.-based Scotty’s Potty’s and Denver-based Jon G’s—while agreeing to several more, which could close before the sale to DLJ.

All the while, Odyssey focused on creating brand “uniformity” throughout the business’ operations, customer services and quality of fleet, “which is necessary when making so many acquisitions,” Kwait said.

To drive organic growth, the firm built out the sales and marketing team, thus creating national accounts and a large and growing special events business. Additionally, USS has benefited from federal and state regulations, such as OSHA’s push to increase the number of toilets per worker on a construction site.

Kwait said Odyssey originally planned an auction for USS and that it had started the I-bank beauty contest process when DLJ approached with expressions of interest. In the end, DLJ was able to preempt an auction, and no sell-side advisor was necessary for Odyssey. —A.N.