THE BACKGROUND 

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Founded in 2012 and based in Big Spring, Texas, SCS Technologies, LLC (SCS) provides turnkey measurement and control system solutions for oil & gas production and midstream operators throughout the Permian Basin. The Company's main line of business is the custom design, fabrication and installation of Lease Automated Custody Transfer (LACT) units, which provide for the automatic measurement, sampling and transfer of oil from the well site into a transportation system, usually pipelines or trucks. They also provide related services including Programming Logic & Control (PLC) Systems, mobile meter proving services, electrical infrastructure installation and service, and other site services. Romanchuk & Co. advised original founders, Jess Slaughter and Cliff Castilaw, on the successful recapitalization of their business with Black Bay Energy Partners.

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RAPID GROWTH REQUIRES A NEW PARTNER  

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SCS had grown rapidly in the 4 years since inception and the owners realized they needed a partner to help them if they were to continue growing and expanding their company. Based on a referral through a mutual colleague, SCS was introduced to Romanchuk & Co. to formulate a plan of preparing the company for a transaction process. SCS communicated that while they desired some current liquidity, they were interested in maintaining significant equity while partnering with a financial group to assist with their growth initiatives.  While the owners were excited about several potential opportunities, they were also concerned about both discretion and the disruption that a time-consuming sell-side process would be to their day-to-day operations of the Company, which was significant given how fast they had been growing.

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PROCESS LEADS TO BROAD INTEREST  

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One initial challenge we overcame was that SCS’ accounting was presented on the cash-basis of accounting and typically investors prefer to determine valuation based on the accrual basis, or GAAP financials. Romanchuk’s team worked efficiently and discreetly to convert SCS’ financials and assisted management in building out a detailed 5-year forecast.  We then developed a comprehensive marketing strategy that attracted multiple potential investors consisting primarily of private equity buyers. 

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Working with Cliff and Jess, Romanchuk & Co. hosted several management meetings at an off-site location over a four-day period.  The ultimate result of these meetings was a letter of intent for a substantial amount more than the group's initial offer.  The deal progressed very smoothly and closed within 60 days from receipt of the Letter of Intent.

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“I am excited to work with Gene and the Black Bay team, and the entire SCS team is proud to announce our partnership with Black Bay. Black Bay’s oilfield experience, industry relationships, and value-added capital will enable the Company to rapidly accelerate our plans for growth in the Permian Basin and beyond.”  

          - Jess Slaughter, President of SCS Technologies 

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EARLY INVOLVEMENT IS KEY  

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We understand that many companies in the lower-middle market may lack the resources for audited or GAAP-based accounting records, which is how our team can add significant value.  Ensuring your financial information is presented in the proper and most logical format helps us to maximize the valuation put on your business in the transaction.  By getting involved in the process early, we can help ensure there are no surprises throughout the deal process and all the way through closing. We also want our clients to remain actively engaged in the day-to-day of their business and let us handle all the fine details throughout. 

 

“The Romanchuk team was integral to our success story at SCS Technologies. They led us through the recapitalization of our company and were able to handle all the fine details with amazing professionalism. They simplified the process and went out of their way to accommodate our busy schedules.” 

          - Cliff Castilaw, President of SCS Technologies

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