O’Melveny Advises Craftsman Capital on Sale of CMIT Solutions to HKWJanuary 10, 2023
FOR IMMEDIATE RELEASE
DALLAS—January 10, 2023—O’Melveny advised private equity firm Craftsman Capital on its sale of CMIT Solutions, LLC, a leading IT Managed Service Provider (MSP) franchisor, to HKW, a middle-market private equity firm. Additionally, HKW acquired HTW, Inc., CMIT’s largest franchisee, to serve as the foundation of a corporate affiliate.
Financial terms of the transaction, which was announced on January 9, were not disclosed.
Based in Dallas, Texas, Craftsman Capital makes controlled investments in lower-middle market companies. The firm actively searches for acquisitions with the following criteria: an owner desiring to sell 100% of a company which has $1 million to $10 million of EBITDA, minimal CapEx requirement, and is headquartered in Texas or the greater surrounding states.
CMIT Solutions offers a wide variety of services and products, including IT management and maintenance, cybersecurity monitoring, help desk support, data backup and recovery, and more. The company supports businesses anywhere in the United States and Canada, and its locally owned franchise model enables CMIT to serve customers through high-trust, direct relationships.
Based in Indianapolis, Indiana, HKW invests in profitable middle-market companies in the technology sector across the U.S. and Canada. The company has sponsored 69 platform transactions of middle-market companies throughout North America and 75 add-on acquisitions.
The O’Melveny team advising Craftsman Capital was led by partners Jack Jacobsen and Will Becker, counsel Ashley Thurman, and associates Sean Horan and Eleanor Gilbert.
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Craftsman Capital issued the following announcement:
Craftsman Capital Announces Divestiture of CMIT Solutions
DALLAS, TEXAS January 9, 2023 – Craftsman Capital announced the sale of CMIT Solutions, LLC (“CMIT”), a leading IT Managed Service Provider (MSP) franchisor, to HKW, a middle-market private equity firm. Simultaneous with the closing of CMIT, HKW also acquired CMIT’s largest franchisee, HTW, Inc. which will serve as the foundation of a corporate affiliate establishing a nationwide fulfillment center.
Will Walters, Partner at Craftsman Capital, commented, “Our investment in CMIT was tailor-made for Craftsman’s strategy of taking a profitable, closely-held, owner-centric company and transitioning it to a more professional organization with increased operational efficiencies. Craftsman achieved its goal of turning the company into one which is primed for superior future growth with increased investment from an acquirer. Craftsman greatly appreciates partnering with CMIT management and is excited to see the future growth of the business under HKW’s ownership.”
CMIT’s revenue and cash flow grew rapidly under the ownership of Craftsman Capital which acquired the business in December 2018. CMIT surpassed $100 million in systemwide revenue in 2022. The sale occurred in just over four years of hold period and produced better than top-decile private equity returns to the investors. In Q1 2022, Craftsman announced receiving the final proceeds of the sale of another portfolio company that produced similar top-decile private equity returns when it sold ScanData Systems to Transplace which was then acquired by Uber Technologies, Inc. (NYSE: UBER).
The financial terms of the transaction were not disclosed.
About CMIT Solutions
CMIT Solutions LLC (CMIT) is a leading Managed Services Provider (MSP) franchisor delivering information technology (IT) and cybersecurity solutions to businesses. Through a large network of enterprise-class technology resources, the company supports businesses anywhere in the United States and Canada, and its locally owned franchise model enables CMIT to serve customers through high-trust, direct relationships. CMIT offers a wide variety of services and products, including IT management and maintenance, cybersecurity monitoring, help desk support, data backup and recovery, and more. The organization has ranked in Entrepreneur magazine’s Franchise 500® list for eight consecutive years and is designated as a World Class Franchise by the Franchise Research Institute. For more information on CMIT, please visit cmitsolutions.com.
About Craftsman Capital
Craftsman Capital is an operationally-focused, Dallas-based private equity firm that makes control investments in lower-middle market companies. Craftsman is actively searching for acquisitions with the following criteria: an owner desiring to sell 100% of a company which has $1 million to $10 million of EBITDA, minimal CapEx requirement, and is headquartered in Texas or the greater surrounding states. For more information on Craftsman Capital, please visit craftsmancapitalpartners.com.
Cowen, Inc. represented CMIT as its exclsive advisor and O’Melveny & Myers LLP served as legal counsel.