Kingsway Expands Skilled Trades Platform with Acquisition of Southside Plumbing

Kingsway Financial Services has acquired Southside Plumbing, a provider of commercial and residential plumbing services in Omaha, Nebraska. This is the third business acquired under the Kingsway Skilled Trades platform.

Kingsway Financial Services Inc. (NYSE: KFS) has announced the acquisition of Southside Plumbing, a leading provider of commercial and residential plumbing services in Omaha, Nebraska. This acquisition marks the third business under the Kingsway Skilled Trades platform [1].

The deal, valued at a maximum purchase price of $6.75 million, includes $4.0 million in cash at closing, a $0.5 million seller note, and a potential earn-out of up to $1.125 million based on growth in adjusted EBITDA [1]. The acquisition comes with a 20% retained equity interest for the seller [1].

Southside Plumbing generates $4.0 million in pro-forma annual revenue and $0.9 million in pro-forma adjusted EBITDA, with approximately 70% of trailing 12-month revenues being recurring or reoccurring. The company's customer base is split 70% commercial and 30% residential, and it has shown strong growth of about 20% per year in its service and repair segment [1].

To support the growth of the Kingsway Skilled Trades platform, Kingsway has secured a new credit facility with Newburyport Bank. The facility includes a fixed-rate commercial term loan at 7.5% with a 7-year amortization schedule, plus access to revolving and equipment credit lines [1].

The acquisition strengthens Kingsway's Skilled Trades platform with a recurring revenue business at a reasonable valuation. The maximum purchase price of $6.75 million against $0.9 million in pro-forma annual adjusted EBITDA implies a 7.5x EBITDA multiple at full earn-out valuation [2].

This acquisition is part of Kingsway's strategic expansion under the Search Xcelerator model, which aims to compound long-term shareholder value [1]. The company's decentralized management model and talented team of operators are key drivers of its success [1].

References:
[1] https://finance.yahoo.com/news/kingsway-announces-acquisition-southside-plumbing-120000590.html
[2] https://www.stocktitan.net/news/KFS/kingsway-announces-acquisition-of-southside-zwmnlg46e34v.html