Manhattan-based e-home has acquired Cloud9 Smart to create a powerhouse custom installation company in New York City. The acquisition, which was completed on April 1, forms a 22-person company focused on high-end custom integration in the New York metro area that will be united under the e-home brand name. Terms of the deal were not disclosed.
e-home was founded in 1996 by CEO Ben Rosner and CFO Jonas Buzzerio. The company focuses on whole-house integration systems strictly in the residential realm specializing in lighting, shades, audio, video, control, networking and more.
Cloud9 Smart is a 21-year-old company owned by Fernando Zorrilla. Cloud9 Smart was the No. 79 company on the CE Pro 100 in 2021 with revenues over $4 million. The company is primarily in the residential custom integration business but also does commercial corporate boardroom and conferencing systems.
“We are really very similar companies,” says Rosner. “We both have well-established, good reputations for high-end projects.”
Rosner and Zorrilla have been friendly competitors for 20 years, getting together on a periodic basis to share the trials and tribulations of running custom integration businesses in New York City.
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“We have a lot in common. Fernando wanted to exit the custom installation business to focus on other projects such as SkyFi Audio, a business specializing in the purchase, reconditioning, and reselling of high-end audio equipment. So, Jonas and I decided to pursue the acquisition,” says Rosner, who says the expansion into commercial work, the combination of the solid client lists, and quality of the Cloud9 Smart team were all key factors in the decision.
“We’ve been wanting to grow. We’re always looking for opportunities to grow and to evolve as a company. There are two types of growth in a business: organic growth and inorganic growth. To achieve organic growth, you need to bring on more staff and more capabilities, market and advertise yourself in different ways to boost sales. That can be a long, slow process.
“Then there’s inorganic growth which is done through mergers and acquisitions. Literally you can instantaneously grow. We essentially doubled the size of our company on April 1. Our revenues doubled, our customer base doubled, and our employee count doubled. We instantly became twice as large, and we feel that with the greater capabilities, greater staff, and relationships we can use that as a launching off point to grow even further.”
e-home Due Diligence Challenges
Industry veterans Paul Starkey and Steve Firzst helped coordinate the acquisition as consultants.
“They were super helpful. I am not sure we could have done it without them. The challenge of bringing together two separate companies is not easy, even though we are primarily selling the same types of products and providing the same types of services,” adds Rosner.
As advice for other integrators looking to make an acquisition, Rosner cites several sets of challenges that need to be overcome, such as doing the due diligence to correctly value a custom installation company, and melding together all the various pieces of software and processes used by e-home and Cloud9 Smart, from proposals to purchase orders to scheduling.
“We are trying to combine the best of both worlds,” says Rosner. “Some of the processes and software will be adopted from e-home and some will come from Cloud9.
Finally, e-home is focused on creating a solid company culture.
“From my research on mergers and acquisitions, one of the biggest challenges or biggest reasons why they don’t succeed or don’t reach expectations is because of a lack of alignment in company culture,” says Rosner.
He says that one of the reasons he moved forward with the acquisition is because the company cultures of both firms were already very similar.
“Both e-home and Cloud9 Smart have a similar level of enthusiasm, camaraderie, and humility. In our industry, there are a lot of cowboys … a lot of prima donnas. Neither of our firms had those types of people. Both teams are low key, respectful, and collaborative. We’re finding that we’re very happy with the way the integration is going,” concludes Rosner.