Kingsway Acquires AAA Flexible Pipe Cleaning Corp for $3.5M, with Potential Earn-Out of $1.5M

Kingsway Financial Services has acquired AAA Flexible Pipe Cleaning Corp, a leading commercial and residential plumbing services business in Cleveland, Ohio, for $3.5 million plus a potential earn-out of up to $1.5 million. The acquisition marks Kingsway's 10th acquisition and brings unaudited pro-forma annual revenue of $7 million and unaudited pro-forma annual adjusted EBITDA of $0.7 million. Kingsway plans to accelerate investment in people, service lines, and marketing to drive revenue and profit growth.

Kingsway Financial Services Inc. (NYSE: KFS) has announced the acquisition of AAA Flexible Pipe Cleaning Corp, a leading commercial and residential plumbing services business in Cleveland, Ohio. The acquisition, which closed on August 1, 2025, marks Kingsway's 10th acquisition and brings unaudited pro-forma annual revenue of $7 million and unaudited pro-forma annual adjusted EBITDA of $0.7 million. The purchase price of $3.5 million, plus a potential earn-out of up to $1.5 million, results in a total maximum purchase price of $5.0 million.

Advanced Plumbing and Drain, as the company is known, was founded in 1926 and has been owned and operated by the Fisco family for nearly a century. The company is renowned for its quality, integrity, and professionalism in the Cleveland metro area. With a customer base split 65% commercial and 35% residential, and approximately 90% of revenues being recurring or reoccurring, the acquisition aligns with Kingsway's strategy to invest in asset-light businesses with recurring revenues.

Kingsway plans to accelerate investment in people, service lines, and marketing to drive revenue and profit growth. The acquisition is part of Kingsway's Search Xcelerator initiative, which employs a search fund model to acquire and build great businesses. The deal structure includes $3.0 million cash at closing, a $0.5 million seller note due in 2030, and the potential earn-out payable in 2027-2028.

The acquisition metrics look favorable, with a maximum 7.1x EBITDA multiple. Without the earn-out, the upfront multiple is just 5x EBITDA, which is quite reasonable in today's market for a profitable service business. The target generates $7.0 million in annual revenue with a 10% EBITDA margin. The recurring revenue profile, with approximately 90% of revenues described as recurring or reoccurring, makes this acquisition particularly attractive.

Management has signaled plans for accelerated investment in people, service lines, and marketing, suggesting potential for margin expansion and organic growth beyond current performance. Kingsway Search Xcelerator's 10th Acquisition.

References:
[1] https://www.marketscreener.com/news/kingsway-financial-services-august-5-2025-a-kingsway-announces-acquisition-of-aaa-flexible-pipe-ce7c5edbd080fe24
[2] https://www.stocktitan.net/news/KFS/kingsway-announces-acquisition-of-aaa-flexible-pipe-cleaning-ad1ol23iuvyk.html