While publicly traded stocks generally had a dismal year in 2022, RLH continued to help build outstanding enterprises that commanded robust valuations.  Most notably, RLH and our portfolio company management teams enjoyed three excellent liquidity events in the past year.

• We recapitalized our portfolio company CrossCountry Consulting (CCC) in a transaction by which our investors received a compelling return on their capital, RLH reinvested in the go-forward CCC business, and RLH retained a portion of the pre-existing CCC business which now operates as CrossVue.  The revenue run rate of the CCC business at the time of the recap was more than 2.5x the level at which RLH invested and well in excess of amounts originally forecast at the time of our investment, an achievement almost entirely attributable to organic growth.  Notably, CCC also was a member of Glassdoor’s 2020 and 2021 lists of the Top 50 Best Small and Medium Sized Places to Work in the US.  We congratulate CCC’s founders Dave Kay and Erik Linn as well as the entire CCC organization on their financial and cultural successes.

• Our portfolio company Utegration was acquired by Cognizant (Nasdaq: CTSH).  Utegration is a leading pure-play full-service consulting and solution provider specializing in analytics and SAP® technology for the utility and energy sectors. Utegration helps its clients increase customer satisfaction, comply with regulatory mandates for service improvements, collect and analyze valuable resource usage data by customer, and capitalize on the digital transformation of the power grid.  We were pleased to support the Company in strategic transformation initiatives such as (i) development of proprietary software addressing unique requirements imposed on regulated utilities, (ii) enhanced focus on culture which resulted in numerous awards as a best place to work, and (iii) adopting new sales and marketing approaches that enabled the Company to diversify its client base.  The Company’s success was a team effort and we are most appreciative of the contributions of CEO Bart Thielbar, Utegration’s co-founders, and the entire Utegration organization.

• Our portfolio company Inspirage was acquired by Accenture (NYSE: ACN).  Inspirage provides enterprise clients with transformative implementation solutions for Oracle’s cloud-based supply chain management software and related enterprise resource planning software.  Through ongoing development of advanced expertise in that software, Inspirage earned repeated recognition by Gartner and Oracle as a leading implementation provider.  With adoption of Oracle’s cloud supply chain software accelerating in 2022, Inspirage achieved outstanding year-over-year results: 50% growth in revenue and a more than doubling of EBITDA.  We applaud CEO and co-founder Srini Subramanian and the global Inspirage team for their enduring commitment to, and success at, being the leading business in their marketplace.    

What common themes do we see in the value creation success of these three portfolio companies? 

• RLH’s ability to add value through our decades of experience partnering with, and distinctive focus on, fast-growing professional services businesses.  Across the many companies with which we have partnered, we identify recurring opportunities to help make strategic transformations.  For example, Inspirage’s delivery focus shifted from on-premise to cloud supply chain software; Utegration added proprietary software to complement its consulting offerings; and CrossCountry Consulting significantly broadened its core financial advisory solutions with new practices in cybersecurity, Workday and Coupa software implementation, and private equity advisory.  

• The commitment of our portfolio company management teams to the preeminent importance of attracting and retaining great team members.  In 2022, several of our companies earned recognition for their workplace culture such as CCC and Utegration as mentioned above, as well as (i) MCAConnect, which was recognized by Inc. as a Best Place to Work and won additional recognition in the Enduring Impact category and (ii) Silverado Senior Living, which was named by Fortune as one of the top 10 Best Workplaces in Aging Services in the United States for the third consecutive year. 

• Our unwavering confidence in the sector trends that drive long-term growth in each of our portfolio companies.  Fully capitalizing on these trends requires years of collaboration between RLH and our management teams and may occasionally be delayed by intervening events such as a pandemic or recession.  But RLH brings the long-term investment horizon and patience to help our portfolio company teams become the leading pure-play businesses to which they aspire.

Like our portfolio companies, RLH believes in the impact of superior talent on organizational success. We were fortunate to add three such individuals to our team roster in 2022.  We welcomed Sherrick Murdoff as a Strategic Advisor and associates Patrick Allen and Sam Merriam to our investment team.  We were also honored by Inc. for the second consecutive year as a Founder-Friendly Investor, an award that, according to Inc., recognizes firms that serve as a partner that entrepreneurs can trust and collaborate with, while receiving the financial and strategic support they need to help accelerate growth.

We look forward to welcoming more middle-market firms into our portfolio in 2023.  Accordingly, we invite your referrals of entrepreneurial management teams that are building market-leading, high-growth, knowledge-based profitable businesses in the $30 – 150 million revenue range within the sectors of business services, healthcare, and government services.  On behalf of the entire RLH team, we hope that 2023