CHICAGO - Kingsway Financial Services Inc. (NYSE:KFS) has expanded its portfolio with the acquisition of Image Solutions LLC, a North Carolina-based IT managed services provider, in a deal valued at $19.5 million. The transaction, which includes additional costs for transaction expenses and working capital adjustments, was funded through available cash and $7.75 million in debt financing.
The acquisition adds $9.8 million in annual unaudited revenue and $3.1 million in annual unaudited adjusted EBITDA to Kingsway's financials. The company anticipates that the addition of Image Solutions will be immediately accretive to its earnings.
J.T. Fitzgerald, President and CEO of Kingsway, highlighted the strategic fit of Image Solutions within the company's Xcelerator portfolio, emphasizing the IT firm's consistent service and premium hardware offerings. Davide Zanchi, Kingsway's Operator-in-Residence, is set to take over as CEO of Image Solutions, with the company's founder, Garrett Williams, staying on as an advisor during the transition period.
Founded in 2003, Image Solutions has evolved from an IT equipment distributor to a comprehensive IT services provider, employing 35 people. The company boasts a business model with approximately 85% recurring revenue, low customer churn, and strong margins. Zanchi expressed his enthusiasm for the acquisition, noting Image Solutions' impressive track record and strong position in a stable and growing market.
The deal was structured as a purchase of all issued and outstanding membership interests in Image Solutions. Avidbank provided the financing for the acquisition, while Holland & Knight LLP acted as legal counsel to Kingsway.
Kingsway plans to discuss the transaction details further during a conference call on Wednesday, October 16, at 5 p.m. ET. Interested parties can access the call via a live webcast or by dialing in using the provided toll-free or international numbers.
Kingsway is a holding company with subsidiaries primarily in the extended warranty and business services industries. Its shares are traded on the New York Stock Exchange under the ticker "KFS." The company's diverse portfolio includes operations in financial services, warranty solutions, and business services.
This news article is based on a press release statement from Kingsway Financial Services Inc.
InvestingPro Insights
Kingsway Financial Services Inc.'s (NYSE:KFS) recent acquisition of Image Solutions LLC aligns with the company's strategy to expand its portfolio in the business services sector. This move is particularly noteworthy given some of the financial metrics and insights provided by InvestingPro.
According to InvestingPro data, Kingsway's market capitalization stands at $221.93 million, with a revenue of $106.42 million over the last twelve months as of Q2 2023. The addition of Image Solutions' $9.8 million in annual revenue represents a significant boost to Kingsway's top line, potentially addressing the company's modest revenue growth of 0.51% over the same period.
An InvestingPro Tip indicates that Kingsway has not been profitable over the last twelve months, which is reflected in its negative P/E ratio of -51.49. However, the acquisition of Image Solutions, with its $3.1 million in annual adjusted EBITDA, could help improve Kingsway's profitability metrics. This is particularly relevant given Kingsway's current operating income margin of -1.07% and EBITDA of $5.36 million for the last twelve months.
Another InvestingPro Tip highlights that Kingsway is trading at a high Price / Book multiple, currently at 10.74. This valuation metric suggests investors are placing a premium on the company's assets, possibly due to growth expectations that could be further supported by strategic acquisitions like Image Solutions.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could provide a deeper understanding of Kingsway's financial position and growth prospects. There are 5 more InvestingPro Tips available for Kingsway Financial Services, which could offer valuable context for this acquisition and its potential impact on the company's future performance.
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