GDI Integrated Facility Services Inc. GDI-T, a conglomerate that offers janitorial services and heating, ventilation and air conditioning (HVAC) repairs, is being taken private by its chief executive officer and Birch Hill Equity Partners Management Inc. for $862-million, buying the company some time to turn itself around away from the public eye.

Based in Montreal, GDI’s shares have endured a multiyear downturn. GDI’s stock soared early in the COVID-19 pandemic when valuations were frothy. Since then, the company has struggled to deliver organic growth, particularly in the United States.

With GDI’s shares down 50 per cent from their 2021 peak, CEO Claude Bigras and Toronto-based Birch Hill, which specializes in mid-market buyouts, are taking the company private again for $36.60 per share in cash. The purchase price is a 25-per-cent premium to GDI’s market price before the transaction was announced.

Mr. Bigras will remain CEO and GDI’s leadership team will also stay in its current form. However, they will operate in a different environment. In a private company, management does not have to publicly report quarterly earnings, so every swing won’t be scrutinized by public shareholders.

In 2024, GDI lost one of its major U.S. clients and filling this hole will take some time. The company has also deliberated shedding some lower-margin clients.

“This disciplined approach sometimes is costly on ego,” Mr. Bigras said on a conference call earlier this year. “Short term, you know what? I get beaten up a little bit. But long term, I think it’s the right thing to do,” he said.

GDI has also tried to show discipline when it comes to acquisitions. One of the easiest ways to offset slower organic growth is by acquiring companies, but Mr. Bigras has said that valuations in the sector didn’t make financial sense for quite some time.

Early in the pandemic, “everybody would sell his mother in the trade and the multiples were just out of my mind,” he said on a conference call in November. “It was almost impossible to do an accretive transaction.”

“Now we are seeing a more going-back-to-normal approach,” he added. But it will take time for rivals to accept lower prices. “People have to digest that.”

This is not the first time that GDI will be a private company. In 2012, GDI merged with a business run by Birch Hill and was delisted from the Toronto Stock Exchange. But it returned to the public market three years later.

For Birch Hill, GDI is in the bull’s eye for the types of companies that private equity firms like to own.

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For one thing, GDI’s debt is less than three times its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). This gives Birch Hill ample room to finance the takeover with debt, and to fund future acquisitions with leverage.

Private equity has also long loved the business lines GDI operates in, because industries such as building maintenance and HVAC tend to be quite fragmented. That means small mom-and-pop players can be “rolled up,” in industry lingo. That allows private equity firms to spend five to seven years bulking up their portfolio companies and then offload each of them to a buyer who is willing to pay much more than the original price.

Sometimes the new buyer is another private equity firm; other times, the business is taken public through an initial public offering.

Birch Hill has been an investor in GDI since 2012, and the firm recommitted to GDI in 2020 by shifting its ownership from one of its investment funds to another. That year, Birch Hill sold all its multiple voting shares and its subordinate voting shares from Fund IV to Fund V for $32.51 per share.

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Under the new deal, Mr. Bigras will roll his shares into the new ownership vehicle. He has been with GDI since 1994 and became a major shareholder in 1998.

GDI’s largest division generates its revenue by providing cleaning services for commercial clients. This includes daily or weekly cleaning and dusting of desks and tables, vacuuming carpets, cleaning floors, sanitizing kitchens and washrooms, and watering plants, among other activities.

The properties that GDI cleans include office buildings, educational facilities, health care establishments, stadiums and event venues, hotels and shopping centres.

GDI’s other large division is called technical services, and it offers HVAC repairs and maintenance, as well as maintenance services for refrigeration, mechanical and plumbing, security systems and power systems, among others.

Roughly half of GDI’s revenue comes from Canada, and the other half is generated in the U.S.