Groundworks announce KKR as a new strategic partner to support growth

Groundworks, LLC, a leading foundation repair and water management services company, and KKR, a leading global investment firm, today announced a major investment in Groundworks as part of a new strategic partnership with KKR. Cortec Group, Groundworks’ current growth partner, will continue to be a significant shareholder in the Company and a board of directors member.

Founded in 2016, Groundworks is the nation’s leading and fastest-growing foundation and water management solutions company. Groundworks’ companies have more than 4,000 employees operating in 33 states and providing residential foundation and water management solutions, including foundation repair, basement waterproofing, crawl space repair and encapsulation, plumbing, gutters installation, and concrete lifting services. Since its inception, the company’s brands have helped nearly 1.5 million homeowners.

The company embarked on a bold vision of building the nation’s leading and fastest-growing foundation and water management solutions company by investing and rewarding its exceptionally capable tradesmen and tradeswomen, said Matt Malone, Founder & CEO of Groundworks. The strategic partnership facilitates Groundworks to further invest in its predominantly blue-collar workforce with equity-sharing programs that will allow every worker to participate in the achievement they help to generate.

‘‘Groundworks provides essential and highly technical services to homeowners across the country, with a differentiated business model and focus on customer excellence’’, said Felix Gernburd, Partner at KKR.

As part of this operation, Groundworks will expand its equity ownership program to make all employees owners of the company. This strategy is based on the principle that employee engagement is a key driver in building stronger companies. Since 2011, KKR portfolio companies have awarded billions of dollars of total equity value to more than 50,000 non-management workers across almost 30 businesses. The new ownership program is aligned with Groundworks’ values and focuses on honouring the nation’s tradesmen and tradeswomen.

Cortec is extremely excited about Groundworks’ new strategic partnership with KKR, through which the company will collectively continue what Matt and the team began building in 2016, said Dave Schnadig, Co-President of Cortec Group. Not only will Groundworks further its leadership at its existing branches, but the Company is also exceptionally well-positioned to enter new markets and broaden its service offering, both organically and by acquisitions.

KKR is making the investment mainly through its North America XIII Fund. The transaction, which is subject to receipt of required regulatory approvals and satisfying other customary closing conditions, is expected to close in the first quarter of the year 2023.

Harris Williams LLC served as the exclusive financial advisor and Paul Hastings LLP serves as a premier law firm providing superior intellectual capital and execution to Groundworks. Deutsche Bank Securities Inc. and William Blair & Company, LLC served as buy-side financial advisors and Simpson Thacher & Bartlett LLP served as legal counsel to KKR.

About Groundworks

Groundworks is the nation’s leading and fastest-growing foundation, and water management solutions company. Headquartered in Virginia Beach, Va., the group companies offer residential foundation and water management solutions, consisting of foundation repair, basement waterproofing, crawl space repair and encapsulation, plumbing, gutter installation, and concrete lifting services. Since its inception Groundworks’ combined brands have helped over one million homeowners. Groundworks operates over 50 offices and has been named for six years in a row to the Inc.5000 Fastest Growing Companies, Qualified Remodeler Top 500, BBB integrity award, and the Best Places to Work.

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR intends to generate attractive investment returns by following a patient and disciplined investment approach, employing top-notch people, and supporting expansion in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit, and real assets and holds strategic partners that deal with hedge funds. KKR’s insurance subsidiaries offer life, retirement, and reinsurance products under the management of Global Atlantic Financial Group. Notes to KKR’s investments may involve the activities of its insurance subsidiaries and sponsored funds.

About Cortec

Founded in 1984, Cortec aims on investing in and helping management build entrepreneur and family-owned middle-market business-to-business and business-to-consumer products and services businesses in consumer, healthcare, and other attractive end markets. Cortec partners with owners and management teams who want to work with Cortec to operate growth and enhance business fundamentals.