Deal Snapshot: Neighborly

Neighborly is a premier residential service provider and franchisor of home service brands focused on providing all of the services consumers need to repair, maintain, and enhance their property. Harris Williams recently advised Neighborly, a portfolio company of funds managed by Harvest Partners, LP, on its sale to KKR.

Here, professionals from the Harris Williams Consumer Group and Business Services Group share insights on why the sector is attractive, what made Neighborly an excellent investment opportunity, and what buyers and investors interested in residential services should consider.

What makes residential services appealing to buyers and investors?

Neuner: Consumers’ continued interest in do-it-for-me services, the aging population, and busier lifestyles are just a few of the trends driving growth in what we expect to be a resilient and attractive residential services market into the future. It’s a very large, highly fragmented market driven by non-discretionary and recurring needs. Many providers are small, local or regional businesses with varying degrees of business sophistication.

Spiller: It’s an area where the right business platform can take share and achieve benefits of scale that create value. Today’s consumers want to engage with service providers digitally. They want providers to be prompt and reliable, and offer good customer service. Platforms with the right tools in their tool kit to meet these objectives can be very successful.

What made Neighborly particularly appealing to its investors?

Morris: Neighborly is the examplar of why investors like home services. It has the technology to provide great customer service and frictionless service delivery. It offers a diverse portfolio of services and has broad coverage in the markets it represents. All of this makes Neighborly easy to do business with and contributes to its significant scale. Neighborly represents 26 service brands across nine countries, and serves more than 2 million customers annually.

Spiller: The company leverages an overall brand while simultaneously promoting the brand equity and consumer loyalty of each service business under the umbrella. People want the expert in the category, and the brands have the equity that builds consumer confidence. The Neighborly overlay makes it easy for people to find the brand, and to have one place to go for reliable, high-quality service.

Morris: The company is a leader in progressing from an aggregator to a fully integrated company with a consistent consumer approach. Over the past three years, Neighborly has invested in sustained future growth with the right people, infrastructure, and technology. Its operating model has unlocked significant economies of scale and platform benefits. It’s also a scalable structure for new acquisitions.

Neuner: Neighborly has a proven, multi-pronged growth strategy with ample ability to grow existing territories and add new ones, enhance its cross-sell, and add new service vehicles. It has a great M&A track record, and a proven ability to integrate acquisitions and accelerate growth post-close. It has also made key investments in its platform. These moves help position the company to “own the home” as the household name for all residential services. It is this strategy that underpins Neighborly’s sustained future growth in consumer engagement, brand offering, franchisee success, and company performance.  

What advice do you have for prospective buyers interested in purchasing a consumer services platform?

Spiller: Winning service platforms ensure the customer knows who is coming to provide the service, when they will arrive, and what they will charge. They provide high-quality service and are easy to do business with. Leaders in residential services will work to make it as easy as possible to get anything done in the home with full transparency and professionalism. To do this, companies need to own the customer relationship, provide high-quality service delivery, and have technology and information support throughout the cycle.

Select Relevant Harris Williams Transactions

In addition to covering residential services, the Harris Williams Consumer and Business Services Groups have deep expertise in a wide range of subsectors. Learn more here:

Consumer
Business Services