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NEW YORK – July 8, 2021 – KKR, a leading global investment firm, announced today that it has agreed to acquire Neighborly® -- described by sources as the world’s largest provider and franchisor of home service brands -- from Harvest Partners. Financial details of the transaction were not disclosed.
Founded in 1981, Neighborly is a leading home services platform that connects more than 10 million residential and commercial customers with a community of professional services focused on repairing, maintaining and enhancing consumers’ homes and properties. Through a portfolio of 28 brands, Neighborly offers a wide array of services including plumbing, pest control, restoration, electrical, cleaning, HVAC, home inspection and many more.
As one of the largest franchisors of ‘do-it-for-me’ professional services, Neighborly has built a network of more than 4,800 franchises both in the U.S. and internationally, including Aire Serv® in the residential heating and air conditioning market; Mr. Rooter in plumbing services; and Mr. Electric in the electrical service arena.
Sources said over the past decade, Neighborly has quickly grown its platform through the organic growth of its existing service brands and strategic acquisitions of complementary franchise service brands.
Mike Bidwell, president and CEO of Neighborly, said, “Today’s milestone is a strong validation of our business-building strategy and differentiated ability to deliver essential home services. We are excited to embark on our next chapter of growth with KKR’s support and global expertise and look forward to continuing to be a partner of choice for both customers and franchise owners in the years to come.”
In an exclusive interview with Contracting Business, Bidwell said KKR had been watching Neighborly's progress in its various home services arenas.
"They said they’ve been watching us for awhile and have long admired the business and the management team. They have a bullish view on the home services market space and believe we are a standout among our peers based on the thoughtful consolidation we’ve had of diverse, adjacent services, our tech-enabled platform and our high dedication to customer service. Those are all things they highlighted that they like about Neighborly," Bidwell said. "The home services space is large and fast-growing. It’s been resilient across market cycles, and is supported by multiple structured tailwinds. Its performance throughout the pandemic put an exclamation point on that [resilience]."
Felix Gernburd, managing director at KKR, said, “In a large and highly fragmented industry, Neighborly stands out for its differentiated strategy of bringing together adjacent services under a diversified and tech-enabled platform, and – most importantly – for its unrivaled dedication to customer service. We are thrilled to be investing in the Neighborly team as they continue to execute on their mission: enriching people’s lives by delivering amazing experiences.”
Nicholas Romano, Partner at Harvest Partners, said, "We are pleased to have worked with Mike and his team to continue building the premier residential service provider providing services that consumers need to repair, maintain and enhance their homes. Thoughtful investments in technology and human capital have resulted in a platform positioned for accelerated growth in the coming years." Harvest's Neighborly investment team is led by Steve Eisenstein, Nicholas Romano and David Schwartz.
Bidwell expressed confidence in the Neighborly.com cross-marketing model, in which brands are cross-promoted to homeowners.
"All of our brands have similar alignment around how we position ourselves in the marketplace and or focus on the customer experience. We focus more on the customer experience rather than price. First and foremost we want to make sure the customer has an outstanding experience, rather than being the low-cost provider," he said.
KKR is making the investment in Neighborly from its North American private equity fund.
Harris Williams is acting as financial advisor to Neighborly, with White & Case acting as a legal advisor on the transaction.
The transaction is expected to close in Q3 2021, subject to regulatory approvals and other customary closing conditions.
