The February deal for Grand Rapids-based tech firm Conway, Dierking & Hillman Inc. allows Red Level Networks LLC to expand its client list, core I.T. services and reach across the state.
Red Level Networks LLC
Top executive: David King
Annual sales: $10 million to $12 million
Full-time West Michigan employees: 14
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Brief business description: A comprehensive technology services company
Advisers: UHY Advisors Inc. (financial), Bodman PLC (legal)
For the Novi-based I.T. services and consulting firm, the acquisition fit with its “growth mindset” to push deeper into services in custom application development, business intelligence and analytics, web-based collaborative platforms and user experience design, according to Red Level CEO David King.
“The driver really was timing and for us to get into some new markets and new services,” King told MiBiz.
From its start in 2004, Red Level had grown by 10 percent to 25 percent year-over-year until a couple of years ago when the organic growth began to slow, according to King.
“As you get bigger and have more staff, it’s harder to continue that exponential (growth),” he said. “We were looking to how we could continue that growth model and M&A seemed definitely part of the strategy.”
After Red Level purchased and renovated a 20,000-square-foot “new home” facility in Novi in 2016, King and the company’s leadership team began actively searching for an acquisition opportunity — the third in its history.
The search included targets in the “general Midwest” and then narrowed to Michigan, according to King.
“The rule of thumb is not to go too much more than a hundred miles outside of your local area so that you can still be connected and close and still manage pretty successfully,” he said.
In late 2018, King connected with the owners of Conway, Dierking & Hillman, which operated in the market as C/D/H. The two companies were familiar with each other, having networked and partnered together in the past, which made working out a deal a more natural process, according to King.
“C/D/H company has a phenomenal, 29-year history as a kind of Grand Rapids icon,” he said. “We found some synergies with the owners and that really made almost a 90-day process for the acquisition.”
The two companies came to the deal with the same ERP and accounting systems and similar phone systems, which made for a smooth transition, according to King. But, “even with technology companies integrating together, there are still technology changes,” he added.
Red Level also approached the deal with an eye toward talent acquisition. The company added 14 employees in Grand Rapids, including former C/D/H vice president Mark Becker, who joined Red Level as senior vice president of business development. With annual revenue between $10 to $12 million, the company now has a total of 46 employees, according to King.
The two companies had both won awards for being employers of choice in their communities and their similar workplace cultures and company values were “key” to retaining C/D/H’s talent and client list, King said. The combined companies now service more than 450 active clients.
“When we actually laid our values out in the process and put them side by side, they were almost identical without having to do any editing or even revising,” he said. “They were really similar in how we had philosophies of how we treat clients, and especially, how we treated our employees.”
As employers across the state deal with a talent shortage in an era of low unemployment, M&A is a valuable tool for obtaining the people companies need to grow, according to King, who added that acquisitions will continue to be part of the company’s growth strategy “in 2020 and beyond.”
“We could not build what (C/D/H) did just organically. We were going to need the processes. We’re going to need the history. We’re going to need the business acumen. We’re going to need the business analysts and the developers,” he said. “To develop all that internally was going to take quite a bit of building on our own, so we decided this is the best way to get to that level and it really makes us unique here in the Michigan market.”
Grand Rapids-based Tech Defenders increased its capabilities to dispose of and refurbish technology equipment through the June 2019 acquisition of Device Renew.
Before the deal, Tech Defenders was a customer of Bowling Green, Ohio-based Device Renew. The companies, both of which operate in I.T. asset disposition, were “moving quite a bit of product” between each other, mainly for refurbishing services on MacBooks, Tech Defenders CEO Garry VonMyhr told MiBiz.
“We have full refurbishing capabilities here, but they were doing some really intricate repairs, like motherboard level, and some intricate soldering work,” he said.
Out of that relationship, the two companies forged a bond.
“We felt like they were kind of like one of us in a lot of different ways,” VonMyhr said. “(They’re) very growth-oriented, hungry (and) willing to do whatever it takes to get the job done with a team-oriented type of atmosphere.”
The companies spent the summer gradually integrating under the Tech Defenders brand, using Device Renew’s Ohio location as a secondary overflow facility. Seven of Device Renew’s former employees now work for Tech Defenders there.
Tech Defenders — which employs 170 people and generates annual revenues in the range of $25 million to $35 million — has been growing by approximately 50 percent year over year since it broke off as the business-to-business arm of retailer Genius Phone Repair in 2014, according to VonMyhr.
“Our goal is to do a million units in 2023, which would be roughly around $100 million in revenue,” he said. “This acquisition was another important step for us to continue bringing in some more of the right people, customers and vendors for us to continue that aggressive growth strategy.”