Kirtland Capital Powers Up For PC Rental Deals

Target: Rent-A-PC

Price: Undisclosed

Sponsor: Kirtland Capital Partners

Seller: Rent-A-PC

Financial Advisor: Seller: BB&T Capital Markets

Middle-market specialist Kirtland Capital Partners has bought a computer-rental company with the aim of launching a nationwide string of acquisitions.

The Beechwood, Ohio-based firm paid an undisclosed sum for Rent-A-PC, a Long Island, N.Y.-based company that supplies PCs and audio-visual equipment for corporate seminars and other short-term business engagements. As part of the deal, Kirtland Capital formed a holding company, Smart Source Holdings LLC, that will complete similar transactions, particularly with an eye toward expansion in the Midwest, said John Nestor, Kirtland Capital’s CEO.

BB&T Capital Markets ran the auction for Rent-A-PC, which is expected to generate $40 million to $45 million in revenue this year. Rent-A-PC’s founder and CEO, Julian Sandler, sought out a financial backer to achieve his mission of eventually reaching $100 million in annual revenue, according to Long Island daily Newsday.

Thanks to 15 acquisitions since Sandler started the company in 1984, Rent-A-PC has expanded from a small regional player into an operation with 215 employees working in nearly 20 offices along the East and West coasts.

“It’s a company that has good cash flow, good history of earnings, is a leader in the industry and, frankly, has the only nationwide footprint in the business,” Nestor said. “And it’s a company that has a lot of room to grow, both organically and through acquisition.”

In one of its most recent deals, Rent-A-PC bought a complementary company that rents out audio-visual equipment for corporate seminars. That company operates only in the New York metropolitan area, and Kirtland Capital expects to expand A/V offerings across Rent-A-PC’s growing operations, Nestor said.

Kirtland Capital secured subordinated debt from National City Corp. and Babson Capital Management to help finance the transaction. Senior debt came from Madison Capital Funding and Merrill Lynch. Despite the slumping credit market, Kirtland Capital experienced little difficulty lining up a debt package, Nestor said.

“We went to our traditional lenders, and that’s where we have an advantage,” he said. “Even in periods of tight financing, we have no trouble getting money.”—J.H.