Seattle-based home services software company Porch Group Inc. (Nasdaq: PRCH) has won a legal dispute with Kandela, a Los Angeles-based moving concierge company Porch acquired in 2019. Kandela filed a lawsuit against Porch in 2020.
Porch paid $11.5 million in stock for Kandela, and the acquisition allowed Kandela to receive "earnout" of over $6 million for hitting revenue and profit goals. The lawsuit alleged Porch tried to hinder Kandela's ability to receive the earnout, but Porch said in a release Wednesday those claims were denied by an arbitrator.
The lawsuit was initially filed in the Superior Court of the State of California, but the case went to JAMS arbitration as required by the acquisition agreement.
“We are pleased with the arbitrator’s decision and are happy to have this matter and any related uncertainty behind us,” Matt Ehrlichman, founder and CEO of Porch, said in a news release.
The company said it prevailed on all counts and the "decision is anticipated to be final and unappealable." Porch will also have its legal fees reimbursed.
The original suit alleged fraud and breach of contract. Kandela said that six months after the acquisition, Porch hurt Kandela's revenues by withholding resources like call center help. The lawsuit also said Porch "undermined Kandela’s credibility with its actual and potential customers by instructing Kandela to sell products and services that did not exist."
Kandela, founded in 2012, handles common moving services like finding movers and setting up internet and home security systems. On its website, the company is called "Kandela, a Porch company." The company had more than 100 employees at the time of the 2019 acquisition.
Porch, meanwhile, launched in 2013 and began as a marketplace before moving more into software about seven years ago. The company now provides software for home services and moving companies, and it has a growing insurance business, in part through its 2021 acquisition of Homeowners of America for $100 million. Porch announced more than a half-dozen acquisitions in 2021.
"We've built a platform. This is what we've invested in for years and years and years, so that we can be able to acquire or build a software, product or new vertical," Ehrlichman previously told the Business Journal. "We've organized the company in a decentralized operating model so we can be able to bring these companies in."
The company went public through a special purpose acquisition company merger in 2020. Porch's stock closed at $2.86 on Thursday, down more than 88% since mid-November.
