Investment Committee Memorandum: Meridian Calibration Services
Platform · Testing, inspection & calibration
1. Executive summary
Meridian Calibration Services is a testing, inspection & calibration business headquartered in Columbus, Ohio with LTM revenue of $62M and LTM EBITDA of $11.8M (19.0% margin). We propose a platform investment at an enterprise value of $118M (10.0x LTM EBITDA), funded with $68M of equity and $53M of debt for 85% ownership. The base case returns 24.0% IRR and 2.8x MOIC (downside 9.0% / 1.5x). Recommendation: Approve with conditions.
2. Recommendation
Recommendation: Approve with conditions
Ask of the committee: Approve a binding offer at up to $118m enterprise value and an equity commitment of up to $68m, conditional on a clean confirmatory QoE and satisfactory customer calls.
3. Company overview
| Item | Detail |
|---|---|
| Company | Meridian Calibration Services |
| Sector | Testing, inspection & calibration |
| Headquarters | Columbus, Ohio |
| Deal type | Platform |
| Deal source | Proprietary, via operating partner network; limited process with two other sponsors |
Meridian provides accredited on-site and in-lab calibration and repair of test and measurement equipment for pharmaceutical, aerospace and industrial manufacturers. Founded in 1998, it operates nine ISO/IEC 17025 accredited labs and 85 field technicians, serving about 2,100 customers with no customer above 6% of revenue. The founder (CEO) will roll 20% of proceeds and remain as chair; the COO will step up to CEO.
4. Investment thesis
- Recurring, compliance-driven demand: 78% of revenue comes from customers with mandatory annual calibration cycles, and gross revenue retention has been above 94% for five years.
- Fragmented market with a visible add-on pipeline: 40+ independent labs under $5m of EBITDA in the Midwest and Southeast, six already in dialogue.
- Clear operational upside: pricing has lagged inflation, route density is low, and scheduling and invoicing still run on spreadsheets.
5. Financial summary
| Metric | Value |
|---|---|
| LTM revenue | $62M |
| Prior-year revenue (implied) | $56.88M |
| Revenue growth | 9.0% |
| LTM EBITDA | $11.8M |
| EBITDA margin | 19.0% |
6. Transaction & capital structure
| Item | Value |
|---|---|
| Enterprise value | $118M |
| Entry multiple (EV / LTM EBITDA) | 10.0x |
| EV / LTM revenue | 1.9x |
| Debt | $53M |
| Leverage (debt / LTM EBITDA) | 4.5x |
| Equity check | $68M |
| Ownership acquired | 85% |
| Fees, cash and other uses (equity + debt − EV) | $3M |
7. Returns analysis
| Case | IRR | MOIC |
|---|---|---|
| Upside | 31.0% | 3.6x |
| Base | 24.0% | 2.8x |
| Downside | 9.0% | 1.5x |
8. Key risks & mitigants
| Risk | Mitigant |
|---|---|
| Founder dependence: the CEO holds the relationships with the 15 largest accounts. | 20% rollover, two-year chair role with a structured handover plan, and COO already leads 9 of the 15 accounts day to day. |
| Technician availability limits growth; field headcount turnover was 18% last year. | Apprenticeship programme in the 100-day plan, market-rate pay adjustment budgeted at $0.6m a year, and a retention pool within the MIP. |
| Leverage of 4.5x leaves limited headroom if a pharma customer delays capex. | Over 70% of revenue is non-discretionary compliance work; covenant-lite unitranche with a 35% EBITDA cushion. |
9. Value creation plan
- Pricing: move to annual CPI-linked escalators and a price book by customer tier (+$1.5m EBITDA by year 2).
- Route density and scheduling software to lift technician utilisation from 68% to 78%.
- Buy-and-build: 4–6 add-ons at 5–7x EBITDA over the hold, financed by a delayed-draw facility.
- Professionalise finance: hire a CFO, monthly close in 10 days, lender-grade KPI reporting.
10. Diligence status & next steps
- Confirmatory QoE: support for $0.9m of owner-related add-backs.
- Customer calls with the top 10 accounts, including two that reduced volume last year.
- Environmental Phase I for the two owned lab sites.
- Final debt commitment papers and W&I underwriting call.
Next steps: Proceed to signing once the open items above are closed to the committee's satisfaction.
Appendix
- A. Financial model: summary outputs and sensitivities [attach]
- B. Quality of earnings summary [attach]
- C. Customer call notes [attach]
- D. Management biographies and references [attach]
- E. Market study extracts [attach]