• Expects to need about 10,000 net new workers over three years
• Long-term O&M contracts – now stretching up to 15 years – generate recurring revenue to support EBITDA multiples in the 20s

Salute CEO Erich Sanchack said the data center services company is evaluating additional acquisitions following its purchase of T5’s operations and maintenance business, with Asia-Pacific expansion and behind-the-meter power operations emerging as two potential areas for its next phase of growth.

Sanchack said in an interview that Salute does not expect to enter APAC from scratch. Instead, he envisions a “string of pearls” strategy of acquiring multiple service providers, combining their capabilities and bringing them under the Salute umbrella. APAC is the second-fastest-growing infrastructure region globally, he said, but Salute currently has little permanent presence there and generally flies personnel in to support projects.

The company is also assessing whether to expand into operations and maintenance for behind-the-meter generation, where hyperscale data centers are increasingly developing private power supplies. Sanchack said acquisitions could be the quickest way to add that capability because customers already rely on Salute for data center operations and are asking whether it can also manage their power systems.

Meanwhile, demand from the AI infrastructure boom is creating a substantial labor challenge. Before the T5 acquisition, Salute projected it would need to add about 10,000 net new employees over three years to satisfy its US pipeline. T5 adds roughly 800 engineers, but those employees are already supporting existing contracts and do not reduce that 10,000-person requirement, Sanchack said.

About 65% of Salute’s revenue comes from the US, 30% from Europe, the Middle East and Africa, and 5% from South America and APAC, with APAC representing only a small portion today.

Core business

Salute traces its roots back roughly 14 years, when Salute Mission Critical was founded partly to address unemployment and homelessness among military veterans by placing them in data center jobs. Early work included security provisioning and specialized cleaning.

Sanchack joined in March 2023 after serving as chief operating officer of Digital Realty. Since then, Salute has expanded through seven integrations, including T5. Its core investments have centered on quality assurance and quality control across the supply chain, commissioning, and full facilities management and operations.

The company also provides advisory work, including site selection, acquisition due diligence and helping developers position projects with communities. Salute remains relatively asset-light because it does not own data centers, Sanchack said.

That model has increasingly produced the kind of recurring revenue prized by infrastructure investors. When Sanchack arrived, Salute’s backlog largely consisted of six- to nine-month contracts. The company is now discussing facilities-management agreements lasting as long as 15 years, while its backlog averages more than 7.2 years.

Valuations

The durability of those contracts also affects valuations. Sanchack said technical, project-oriented businesses such as commissioning and QA/QC historically trade at high-single-digit to low-double-digit EBITDA multiples. Facilities-management businesses traditionally commanded about 15 to 18 times EBITDA, while current valuations can reach into the 20s.

“And something like ours, some might argue, it goes even higher,” Sanchack said, citing Salute’s backlog and customer base.

LLR Partners was Salute’s primary private equity investor when Sanchack joined. Rapid growth prompted a capital event within nine months, rather than the two-to-three-year timeframe initially envisioned, bringing New Mountain Capital in as majority owner while LLR retained a minority stake.

New Mountain entered with a typical five-year investment plan, but Sanchack said Salute has already achieved the economics contemplated under that plan. For now, he said, both investors appear interested in remaining involved and benefiting from continued growth.

Salute is also positioning for more complex AI infrastructure. Direct-to-chip liquid cooling requires workers trained in chemistry management and fluid dynamics in addition to conventional mechanical and electrical skills. Customers currently pay only about a 10% premium for those capabilities, Sanchack said, but he expects that to change as more liquid-cooled facilities enter operation.

“The market hasn’t commanded [more of a premium] because it doesn’t know. It’s not educated yet,” he said.