Horizontal Directional Drilling: Industry Whitepaper for a PE Client

Vedansh was working with a small US-based PE fund focused on niche B2B service companies. The client was evaluating a horizontal directional drilling company operating in Texas and needed a full sector whitepaper to inform the investment decision.

The brief covered market sizing, growth drivers, competitive landscape, and risks. Vedansh structured the research from the ground up.

Market Sizing

He started with the total US market for horizontal directional drilling, then narrowed to the Texas region where the target company generated the majority of its revenue. For the regional breakdown, direct data was limited, so he proportioned the Texas market from national figures using available regional proxies. He cross-referenced multiple industry reports, including sources like Intello and Markets Insights, and calibrated the sizing against the client's internal benchmarks.

Growth Drivers

Two bull-case drivers emerged from the research. First, hyperscaler AI capex: major technology companies were investing heavily in AI data centers, increasing demand for laying new fiber and electricity lines across Texas. Second, a US government infrastructure bill was actively promoting investment in infrastructure construction, directly benefiting horizontal directional drilling demand.

Competitive Landscape and Risks

Vedansh mapped the competitive landscape, identifying which companies served similar customer segments and what types of clients they were targeting. On the risk side, he flagged rising raw material and machinery costs as a short-term cash flow risk, and vertical integration by data center operators, who were beginning to manage their own cabling infrastructure, as a longer-term structural risk.

The Automation Angle

Separately, through his own reading, Vedansh had been following automation trends in US manufacturing. He had come across research on companies building automated machinery for industrial applications and saw a direct connection to the labor cost structure of horizontal directional drilling, where labor was a significant proportion of operating expenses.

The client brief had not asked for this angle. He included it as a forward opportunity section in the whitepaper, making the case that automation investment in the sector was well-timed given declining US workforce availability and rising labor costs.

The client's response was to reduce the planned investment in the original target company and redirect capital toward a separate company building automated horizontal directional drilling equipment.