Levine Leichtman Capital Partners takes majority stake in USA Water

Levine Leichtman Capital Partners acquired USA Water from Warren Equity Partners in February 2024, investing alongside the management team, which reinvested and kept a significant stake. Chief executive Jeff Haley stayed at the head of the company. Based in Rosenberg, Texas, USA Water operates and maintains water and wastewater systems on behalf of the municipalities and utility districts that own them. Its staff run the treatment plants and pumping stations, maintain the pipes and equipment, carry out the sampling and testing that regulations require, and file the reports to the state authorities. Its customers are local bodies across the south-eastern United States. The work is outsourced because the alternative is impractical for a small district. Running a water system requires licensed operators, certified at levels set by each state, available around the clock and present whenever something fails. A district serving a few thousand households cannot recruit and retain those people, nor keep abreast of the reporting obligations that follow every change in federal and state rules. A contractor with operators spread across many systems can. That also makes the revenue durable: water must be treated whatever the economic conditions, contracts run for years, and a district that has handed over its operations rarely rebuilds the capability to take them back. Levine Leichtman invested to widen the range of services and extend the geographic coverage, organically and through acquisitions, in a market divided among regional operators. The firm had backed similar technical and route-based service businesses, among them Encore Fire Protection, Technical Safety Services, Trinity Consultants, In-Place Machining and Select Exterminating. Kirkland & Ellis advised Levine Leichtman, while Harris Williams and Holland & Knight advised USA Water.