Houlihan Lokey Advises Re-Sourcing Holdings

Houlihan Lokey is pleased to announce that Re-Sourcing Holdings (Re-Sourcing), a portfolio company of McNally Capital (McNally), has been acquired by MidOcean Partners (MidOcean). The transaction closed on December 27, 2023.

Re-Sourcing is a leading professional services firm providing staffing, consulting, and direct hire solutions that specialize in finance and accounting, legal and compliance, and IT. This partnership with MidOcean provides Re-Sourcing with the capital and resources to accelerate its growth and further expand its solutions offerings and geographic footprint.

Founded in 2003, Re-Sourcing offers a full suite of services catering to the needs of the offices of the CFO, CCO, and CIO. The company operates under several industry-leading brands, including Compliance Risk Concepts (CRC), Conexus, JW Michaels, and ExecuSource, among other partner brands, which are strategically located in 20 offices across 10 markets nationwide. Re-Sourcing’s brands serve a diverse clientele ranging from Fortune 500 customers to growing middle-market companies and leading institutional investors.

• CRC, which focuses on the legal and compliance sector, is a premier provider of actionable and cost-effective compliance management services within the financial services industry. Founded in 2013, CRC is led by a business-focused team of senior executives who offer clients top-tier compliance risk management services on an as-needed, project, or part-time basis.
• Conexus, which focuses on the professional staffing sector, is a leader in high-end interim consulting, advisory, and direct hire talent solutions. Since its founding more than a decade ago, Conexus has built a strong reputation in the marketplace by sourcing high-quality, hard-to-find candidates in the C-suite and middle management with specialized skill sets.
• JW Michaels, which focuses on the legal and compliance sector, is a leader in direct hire, staffing, and consulting solutions for Fortune 100 customers, investment managers, and financial service companies. Founded in 2010, JW Michaels’ tenured team has built an industry-leading brand providing clients with highly skilled legal and compliance talent solutions.
• ExecuSource, which focuses on the professional staffing sector, is a leading provider of strategic staffing and direct hire solutions. Founded in 1998, ExecuSource has a long-standing track record of applying its deep-rooted expertise in delivering high-quality IT talent solutions.

McNally is a lower-middle-market private equity firm targeting thesis-driven investments in the U.S., specifically focused on acquiring founder and management-owned companies. Formed by the McNally family, who owned and operated Rand McNally & Company, McNally is dedicated to upholding a 160+ year legacy as a family-owned and operated company. The firm seeks to apply its hands-on experience, institutional capabilities, and proprietary value-creation framework to benefit management teams in their next phase of growth and build value for its investors. McNally invested in Re-Sourcing in line with the firm’s investment thesis in business services and human capital management. The investment was consistent with the firm’s strategy of partnering with founders and management owners to promote the continued success and expansion of privately held businesses.

“We are proud to have built upon Re-Sourcing’s impressive history of growth and created value for our investors. Our firm’s thesis-driven investment philosophy and proprietary value-creation framework enabled us to execute on unique acquisition opportunities and accelerate growth for the Company and its shareholders,” stated Adam Lerner, Partner of McNally Capital. “We look forward to their continued success.”

“Re-Sourcing has established a strong reputation as a staffing industry leader. Under McNally Capital’s ownership and my partners’ efforts, we have achieved rapid organic growth and significant scale, particularly through our acquisitions of Conexus Recruiting and Logis CFO. Both highly reputable West Coast brands, these acquisitions further expanded our geographic reach and service offering for our clients, made possible through a strong balance sheet, our lenders’ support, and McNally Capital,” said Joe Kelly, CEO of Re-Sourcing. “Our partners have built exceptional businesses that provide best-in-class solutions to key industries. As owners and founders, we are well-positioned to capitalize on numerous opportunities, including a continued focus on the offices of the CFO and CCO, as well as technology implementation. We are thrilled to scale the Re-Sourcing platform with the support of MidOcean Partners, which has a proven track record of helping professional services companies execute their growth initiatives.”

MidOcean is a premier New York-based alternative asset manager specializing in middle-market private equity and alternative credit investments. Since its inception in 2003, MidOcean Private Equity has targeted investments in high-quality, middle-market companies in the consumer and business services sectors. MidOcean Credit was launched in 2009 and manages a series of alternative credit strategies, collateralized loan obligations, and customized separately managed accounts.

MidOcean is a long-standing investor in the professional services and human capital sector with a focus on end markets exhibiting clear secular growth trends. Re-Sourcing marks MidOcean’s fifth investment in the space. Previous investments include GHR Healthcare, a leading provider of healthcare staffing services; System One, a leading provider of staffing and outsourced services in the engineering, scientific, and technology fields; Global Knowledge, a world-class provider of IT training to corporate clients; and The Planet Group, one of the world’s leading diversified professional services organizations.

Elias Dokas, Managing Director at MidOcean, commented, “We are excited to invest behind Joe and his partners, who are proven leaders in serving the offices of the CFO, CCO, and CIO. Re-Sourcing has built an impressive business that has experienced strong growth by delivering superior service to its clients. We see numerous opportunities for further growth through both organic initiatives and strategic acquisitions. These include deepening the company’s relationships with existing clients, expanding its service offerings, and entering new markets. We look forward to working closely with the Re-Sourcing leadership team, capitalizing on these opportunities, and fostering the continued growth of the company.”

Houlihan Lokey served as the exclusive sellside financial advisor to Re-Sourcing and McNally.

Houlihan Lokey’s Human Capital Management (HCM) team is among the most active M&A advisors in the market, having closed 23 HCM transactions in the past 36 months. This most recent transaction further strengthens Houlihan Lokey’s leadership in the business services universe and highlights continued momentum and leadership in the HCM sector, which includes staffing, recruitment, VMS, MSP, RPO, talent management, and PEO.

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