Kingsway acquires Texas-based Roundhouse Electric for $22.4 million

CHICAGO - Kingsway Financial Services Inc. (NYSE:KFS) announced on Tuesday the acquisition of Roundhouse Electric & Equipment Co., a provider of industrial electric motor services, for $22.4 million plus transaction expenses and a working capital adjustment.

The Odessa, Texas-based Roundhouse provides maintenance, repair, testing, and sales solutions for industrial-scale electric motors, primarily serving midstream natural gas pipeline operators and utilities across the Permian Basin.

According to the company’s press release, Roundhouse has more than 200 active customers, with approximately 90% of revenues being either recurring or reoccurring. The company reported unaudited trailing 12-month revenue of $16.0 million and adjusted EBITDA of $4.2 million.

The transaction closed on July 1 and was funded with $10.4 million in cash and $11.0 million from a senior credit facility. As part of the deal, the selling shareholders will maintain an economic interest in the company.

Miles Mamon, who sourced and led the transaction for Kingsway, will assume the CEO role at Roundhouse, while Lee Hudson, current Vice President and co-owner, will remain as President.

"Roundhouse is a perfect fit for the Kingsway Search Xcelerator platform," said JT Fitzgerald, Kingsway’s President and CEO, in the statement. "Roundhouse is a growing, capital-light, high-recurring revenue business with a seasoned team, a strong culture, and deep customer relationships."

Kingsway Financial Services describes itself as the only publicly-traded US company employing the Search Fund model to acquire businesses. This marks the company’s ninth acquisition through its Search Xcelerator program. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value, with a notably high Price-to-Book ratio of 74.5x.

In other recent news, Kingsway Financial Services Inc. reported an 8.4% increase in revenue for the first quarter of 2025, reaching $28.3 million. However, the company’s adjusted EBITDA declined by $800,000 compared to the previous year. The company recently completed strategic acquisitions, including MLC Plumbing and Viewpoint, to enhance its service offerings. Kingsway has also raised its acquisition target to 3-5 businesses per year following a $15.7 million private placement. Additionally, the company issued a new class of preferred stock, raising $2 million in a private placement. This move aims to strengthen Kingsway’s capital structure without immediate dilution of common stock. Analyst firms have not provided recent upgrades or downgrades for Kingsway, but the company continues to focus on expanding its business segments. These developments indicate Kingsway’s ongoing efforts to grow and adapt its business strategy.

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