Beacon Mobility, an Audax Private Equity-backed operator of buses for schools and other specialty uses, is in the second round of a sale process with financial advisor Morgan Stanley, said three sources familiar with the situation.

The Southborough, Massachusetts-based company has EBITDA of around USD 200m, said two of the sources. All three sources added that Beacon could fetch a 9x to 10x EBITDA valuation if a deal is struck.

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Along with operating school buses, Beacon provides transportation for special education, paratransit and non-emergency medical programs and chartered events through 17 local brands in 22 states. The third source said Beacon’s diverse array of services could lower the valuation of the company compared to focused school bus operators that can be valued at 10x EBITDA.

Beacon collected first round bids earlier this month, two of the sources said. One of them said that the auction launched in October.

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Private equity firms are looking at the business, said the second source, while the other two said sponsors as well as infrastructure funds looking to break into the industry are logical suitors.

Given the need for Beacon’s services, it has proven to be a non-cyclical business regardless of economic downturns, the first source added.

The sale comes as there has been robust investment by private equity and infrastructure funds in the North America school bus industry, attracted by the essential nature of the service and the potential to move towards electrical vehicles.

In recent deals, CDPQ-backed Student Transportation of America acquired Pacific Western Transportation and Connor, Clark & Lunn Infrastructure bought Ontario-based Landmark Student Transportation. Last year, H.I.G. Infrastructure acquired North America Central School Bus and EQT Infrastructure bought sister bus companies First Student and First Transit from the UK’s FirstGroup [LSE:FGP].

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EQT sold First Transit, a provider of buses for communities, colleges, businesses and senior care facilities, to France’s Transdev in October for undisclosed terms, allowing EQT to hold onto the more valuable school bus business First Student. First Transit is a logical comp for Beacon given both firms offer paratransit services, the first source said.

Audax bought Beacon, then operating as Van Pool Transportation, for undisclosed terms in 2018; Van Pool is now one of many subsidiaries held by Beacon. Since Audax’s takeover, Beacon has made a number of acquisitions, including DS Bus Lines and Midwest Bus Sales (both in October 2022), coach and limousine services group Travel Kuz (September 2022), Easton Coach (October 2021), and WE Transport (July 2021), which offers transport services to wheelchair-bound riders, pre-school children and other passengers. No terms were disclosed for these deals.

BlackArch Partners advised Van Pool-previously held by Fort Point Capital-on the Audax acquisition. Kirkland & Ellis was legal counsel.

Morgan Stanley declined to comment, while Audax and Beacon did not return requests for comment.

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