THE GOAL
Homefield IT hired RKCA to pursue a sellside transaction that would potentially benefit not only the business but also the employees and clients.
THE OUTCOME
RKCA analyzed numerous offers and discovers a buyer who may expand Homefield’s current team reach while providing immense value to clients.
While running individual IT consultancies in New York City, James Refino, Christian Ugolini, and Joseph Rabinowitz realized that they had the same frustrations about the managed services industry.
“We felt that the whole model of servicing businesses in the IT world was broken,” said Joseph Rabinowitz, Co-Founder. “We were getting our income from solving challenges for clients. The more problems they had, the more money we made. That just didn’t sit right with us.”
So in 2011, they founded Manhattan Tech Support, a managed IT services and technology support solutions venture with a fresh approach. Instead of billing hourly, they charged a flat monthly rate. Not only did the business have predictable revenue, but their clients didn’t hesitate to come to them with questions, which meant they could troubleshoot an issue before it become a real problem.
The idea resonated with clients. Ten years later, Manhattan Tech Support changed its name to Homefield IT to better reflect its growing business, already active across 17 states.
Exploring an M&A Opportunity
As James, Christian, and Joseph continued to seek business opportunities, they decided to explore the idea of a merger or acquisition. “Our industry is highly fragmented,” says Joseph. “A lot of consolidation was taking place. This was a big movement, and we wanted to be a part of it.”
While at an IT conference in Orlando, Florida, Homefield’s co-founders attended an M&A deal session where facilitators sought to match buyers and sellers of service IT businesses. There, they discovered that there was only about one seller for every 15 buyers in the room. “I knew which side we should be on,” laughs Joseph. “Having 15 buyers competing for us sounded appealing.”
At that same session, Homefield met RKCA and discussed the potential with them. Soon afterward, Homefield’s co-founders decided to pursue a sell-side transaction to see if it would be the best move for the business.
Hiring RKCA to Source the Right Deal
James, Christian, and Joseph interviewed a few candidates but quickly settled on RKCA. Even though several bankers had more experience in their industry, they were confident that RKCA really valued Homefield.
“We trusted that RKCA would give us the attention and level of care that we felt would be necessary for a successful transaction to take place,” says Joseph. “They exceeded our expectations every step of the way.”
For Homefield, striking a deal wasn’t only about their bottom line. The decision needed to benefit both their team and their clients, about whom they cared deeply.
In fact, with a growing company, satisfied clients, and smooth daily operations that no longer required much involvement from the cofounders, James, Christian, and Joseph were willing to walk away at any point in the process if it didn’t seem like the right buyer existed.
“With three equal partners each at a different stage in life, we knew f inding the right deal to satisfy all would be exceptionally challenging,” explains Christian. “From our very first conversations with the RKCA team, it was clear that they were going to be a very meticulous and diligent partner in helping us achieve our collective and individual goals.”
Analyzing Numerous Options
Fortunately for Homefield, RKCA reached out to more than 200 potential buyers and painstakingly sifted through more than a hundred interested parties. It seemed they would certainly have options.
“The number of back-and-forth conversations and exchange of legal documents from the initial NDAs to the final LOIs was immense,” says Joseph. “But RKCA handled everything and provided a clear timeline outlining our level of involvement and our team’s level of involvement at every stage,” says Joseph. “Their guidance was invaluable.”
At play, too, were macroeconomic variables beyond anyone’s control, like rising interest rates and a possible recession. Homefield says RKCA seamlessly navigated the potential effects of these variables as they narrowed the list of interested parties. Not only that, but RKCA handled the complex calculations that go into any deal. Every month, as numbers changed with Homefield’s earnings, numbers with potential buyers had to be updated. RKCA constantly communicated while pursuing synergistic opportunities to maximize the value for both sides.
While the process was rigorous, a dedicated team from RKCA remained responsive to Homefield’s every need. At any point, if they needed to discuss something—even if it was 1:30am on a weekend—RKCA was available. “They were the most attentive vendor or partner we’ve ever worked with,” says Joseph.
Then, after analyzing the quality and structure of every single offer, RKCA presented clear frontrunners and kicked off negotiations.
Selecting A Buyer
For Homefield, that comprehensive analysis was crucial. “It’s not like you could just sum it up with a single top-line number,” says Joseph. “Other elements like the structure, buyer profile, and cultural fit are so crucial.”
In the end, RKCA’s tireless negotiations resulted in a final deal that far surpassed what Homefield had hoped: a buyer with a stellar reputation and vast resources that will extend both reach and value. They were even able to bake in significant incentives and opportunities for the entire Homefield team.
“In each and every interaction, the RKCA team took the time to thoroughly understand our company, our industry, and our numbers,” says Christian. “In an industry ripe with M&A, they brought a welcomed new perspective to a somewhat ‘cookie-cutter’ process for valuation and deal structure.”
“We are extremely ecstatic with the result,” adds Joesph, “The buyer, Acrisure, is a huge player in the FinTech world and insurance world, but they weren’t particularly active in our space. Without RKCA, there was no situation where we would have been in front of them.”
The Future for Homefield
On the day of the announcement of the sale, the CEO and CFO of Acrisure flew into NYC headquarters to talk directly to the Homefield team and cast an exciting vision for the future. By combining forces, Homefield and Acrisure are both stronger than ever. “Acrisure has a very well-regarded cyber security division,” says Joseph. “That is extremely complementary to the IT services we provide. Not only are all of our employees staying on, but this is a huge win for our clients as well.”
Now Homefield is excited about what’s next. While James and Christian will move on to new endeavors as planned, Joseph decided to stay on as a consultant. Together, Homefield and Acrisure intend to build the premiere IT services business in the country.
DISCLAIMER: The content of this material was obtained from sources believed to be reliable. However, RKCA does not warrant the accuracy or completeness of any information contained herein and provides no assurance that this information is, in fact, accurate. The information and data contained herein is for informational purposes only and is subject to change without notice.
The material is provided solely for informational purposes and does not consider the specific objectives, circumstances or profile of any particular buyer or seller and should not be relied upon for any specific course of action. This material should not be considered, construed, or followed as investment, tax, accounting, or legal advice. Any opinions expressed in this material are those of the authors and do not necessarily reflect those of other employees of RKCA. Market data proprietary to source cited, may not be reprinted, reproduced, or used without permission from the source or RKCA.
The persons providing the testimonials on this website have experience in the services that RKCA, Inc. provided. Their respective experience with RKCA, Inc. may not be representative of all other Clients of RKCA, Inc. Testimonials are not paid for by RKCA, Inc. Testimonials do not constitute a guarantee of future performance or success related to any product, transaction or service.
Investing involves the risk of loss. Past performance is not indicative of future results.
The content of this material should not be construed as a recommendation, offer to sell or solicitation of an offer to buy a particular security or investment strategy.
Investment banking services provided by RKCA, Inc., Member SIPC/FINRA. Non-securities related services provided by RKCA Services, LLC. 1077 Celestial Street, Cincinnati, Ohio 45202. Phone: 513.371.5533.
