Appliance Repair Services Sector M&A Activity

Part
01
of two
Part
01

Appliance Repair Services Sector M&A Activity Part 1 (Valuation)

An extensive search through press releases, databases, and company websites revealed only the annual revenues for Serviz, Commercial Appliance Service, and Broughton Appliance Service. Multiple revenue could not be calculated because purchase prices are not published.

2017 & 2018 ANNUAL REVENUE

Serviz
  • The estimated annual revenue for both years is $3 Million.
Commercial Applicance Service
  • The estimated annual revenue for both years is $3.7 Million.
Broughton Appliance Service
  • The estimated annual revenue for both years is $641, 983 .

PURCHASE PRICE

Serviz
Commercial Appliance Service
Broughton Appliance Service

MULTIPLE OF REVENUE

The multiple of revenue for the three companies cannot be calculated due to lack of information about their selling prices.

INSIGHTS INTO THE VALUATION OF THE COMPANIES (DIVIDENDS, CASH FLOW, AND GROWTH RATE)

The valuation of the companies could not be obtained.

RESEARCH STRATEGY

REVENUE
To identify the companies' revenues, we specifically searched for the annual reports for the companies with the hope that we would directly obtain the revenues from here. However, the companies do not have any publicly available annual reports. We, therefore, resorted to searching for the revenues on reliable websites such as Privco and Fortune 500. These websites had no information pertaining to the companies. It was also impossible to triangulate the revenues because no information about the specific product pricing information for the companies and consumer data could be obtained from any of the websites. A final general search derived revenues from websites such as Manta and Owler. These, being the only sources that had the relevant information, were used to provide the revenues. The sources listed the revenues as "estimated annual revenues" and were considered as revenues for 2017 and 2018.

MULTIPLE OF REVENUE
Figuring out the multiple of revenue for the companies solely depended on determining the selling prices of the companies because multiple of revenue is equal to the selling price of a company divided by 12 months of revenue of the company. Our initial research approach for identifying the selling prices of the companies involved searching for the parent companies' annual reports during the purchase years. Annual reports of the parent companies usually the information about the purchase price. However, this strategy proved to be futile because the parent companies (Parts Town, Porch, and Appliances on Lakeside) do not have any available annual reports.

We then decided to switch gears and searched for specific news articles, press releases, announcements, and industry publications announcing that the companies had been acquired. These include Biz Journals and Forbes. Once again, the only news article that contained significant details was about Serviz and it also failed to mention the selling price of the company.

Finally, we consulted expert databases such as Mergent Online, Nexis Uni, and Business Source Complete which contain information about mergers and acquisitions. This information usually includes the selling price. However, these databases were pay walled and, we were, therefore, did not obtain any information on the specific companies.

One specific challenge (which explains why the information about these companies may be missing) is that these are privately held companies which do not publish financial reports of their companies. It could also be because the companies do not want to publicize their annual reports as this may make them susceptible to scrutiny.

VALUATION (Dividends, Cash flow, and Growth Rate)
Our research strategy for identifying the valuation of the companies involved first searching the companies' websites for annual reports pertaining to these financial measures. Annual reports are usually excelent and credible sources for valuation information. However, as explained above, no annual reports were obtained.

Next, we went through databases such as Crunchbase which contain information on funding for companies and reveal the companies' valuation as per the funding stages. This was a futile attempt as the value of the companies was not provided.

Our final strategy involved searching for press releases and announcements discussing the acquisitions to identify the company's worth. However, press releases did not mention the dividends, cash flow, or growth rates of the companies.
Part
02
of two
Part
02

Appliance Repair Services Sector M&A Activity Part 2 (Valuation)

The annual revenue of Action Appliance is estimated at less than $500,000. While there is no publicly available information to fully answer the rest of the question, we've used the available data to pull together key findings. The annual revenue for the parent company of Alpro Service Company and Mid-South Maintenance, Smart Care Equipment Solutions, is estimated at $200 million while annual revenue for Reddi Industries, parent company of Action Appliance, is estimated at $14,738,010. Below is an outline of our research strategies to better understand why the information requested is publicly unavailable, as well as a deep dive into our findings.

Alpro Service Company

  • In June 2018, Smart Care Equipment Solutions acquired Alpro Service Company, a business that provides service for commercial kitchen appliances and equipment.
  • The terms of the acquisition were not disclosed.
  • Parent company, Smart Care Equipment Solutions, has an estimated annual revenue of $200 million.

Mid-South Maintenance

  • In February 2019, Smart Care Equipment Solutions acquired the appliance maintenance and repair company, Mid-South Maintenance.

Action Appliance

  • In March 2019, Reddi Industries acquired Action Appliance, Inc. to add appliance repair to its service offerings.
  • The annual revenue of Action Appliance is estimated at less than $500,000.
  • The estimated annual revenue for Reddi Industries excluding the plant division is $14.5 million while the Reddi Industries plant annual revenue is estimated at $238,010 for a total of $14,738,010 in annual revenue.

Research Strategy

To locate the annual revenue and purchase price for each company, your research team first searched for annual reports and company filings to find either the data itself, or other information that could be used to calculate an estimate. We were unable to locate any such reports or information. Then we attempted to scour merger-and-acquisition databases, as well as company profile directories for the relevant information, but the databases were locked by paywalls and membership fees. The only pertinent information located in the company profile directories was the annual revenue for Action Appliance, though it is only a ball-park estimate.

Lastly, we reviewed articles and press releases from and about the company to see if that information had been published or referenced in any interviews. In the cases of Mid-South Maintenance and Alpro, those sources confirmed that acquisition data was not disclosed to the public. Ultimately, the sources proved unfruitful in locating annual revenue information for those two companies or acquisition information regarding Action Appliance. This is most likely because these are private companies and are not required to disclose such information.

As we were not able to locate additional information on the valuation of the acquired companies, we provided the annual revenue for the parent companies Reddi Industries and Smart Care Equipment Solution gleaned from their company profiles. In order to calculate the total estimated annual revenue of Reddi Industries in all their divisions, we added the annual revenue for Reddi Industries Plant ($238,010) and Reddi Industries Inc ($14.5 million) which houses the rest of the company's divisions. Calculation: $238,010+$14.5 million=$14,738,010 in annual revenue. Additionally, we were able to locate a market research report for the appliance maintenance industry in the United States. This report may give helpful insight into overall industry growth and market trends.
Sources
Sources

From Part 02
Quotes
  • "February 2019 – Mid-South Maintenance becomes the third acquired service company to join the Smart Care family"
  • "June 2018 – REMCO and Alpro Service Company become the first two acquisitions of Smart Care Equipment Solutions"
Quotes
  • "Smart Care® Equipment Solutions announced the acquisition of Mid-South Maintenance, a provider of commercial kitchen equipment repair and maintenance services to the commercial food service industry. "
Quotes
  • "Reddi Industries has entered the appliance repair market with the acquisition of Action Appliance Inc."
Quotes
  • "Consequently, industry revenue has grown at an annualized rate of 0.2% to $4.9 billion over the five years to 2019."
Quotes
  • "Reddi Industries Plant is estimated to generate $238,010 in annual revenues, and employs approximately 2 people at this single location."
  • "There are 2 Companies located at 6205 E Kellogg Dr, Wichita, KS 67218."
Quotes
  • "Reddi Industries is estimated to generate $14.5 million in annual revenues, and employs approximately 73 people at this headquarters location and 75 total employees across all locations."
Quotes
  • "Current estimates show this company has an annual revenue of less than $500,000 and employs a staff of approximately 1 to 4."