In what is anticipated to be the kick off to a forthcoming national expansion, Florida Home Improvement Associates (FHIA) today completed its acquisition of Statewide Remodeling, the largest specialty remodeling company in Texas. The sale was possible through financial backing from York Capital Management.
Prior to its purchase, Statewide Remodeling had operated independently for 25 years, growing to annual sales of over $65 million in 2018. It operates offices and showrooms in Dallas, Austin, Houston, and San Antonio.
While neither FHIA nor York Capital Management have yet shared specifics on why its first acquisition was in Texas—a state more than 450 miles from Florida at its closest point—it may have something to do with the strength of the Statewide’s market areas.
From the beginning of 2018 through the first half of 2019, remodeling sales growth in Houston jumped from zero to 5%, and is expected to reach 8% by year’s end—speeding up while the rest of the country is slowing down—according to data from the Joint Center for Housing Studies of Harvard University; and in Austin, projections see growth steady at 6% into Q4—above the national 5.5% growth average projected for the same period.
Additionally, no Southern market spent more remodeling dollars in 2017 (see map) than Dallas ($6.1 billion), and behind that Houston ($4.92 billion). Atlanta was the no. 3 biggest spender—shy of Houston by about $1.3 billion.
Statewide is also in the process of expanding its own services to Oklahoma and Arkansas—which would somewhat close the geographic gap. Statewide’s expansion was explicitly mentioned in FHIA’s announcement of the acquisition, leading a speculative mind to wonder: are future acquisitions in the two Texas neighbor states part of FHIA’s phase 2?
Through the acquisition, FHIA can expect to immediately increase its client roster by upwards of 40,000. Though, Statewide, at least for the time being, will maintain its organizational structure.
Another Private Equity Player
Possible motivations aside, the sale and FHIA’s ultimate expansion—which it says will be “national”—marks another private equity firm adding to its home improvement portfolio—something that was uncommon only a few years ago, according to a report from Harvard researcher Abbe Will. This comes on the heels of investments from Providence Equity into EverCommerce, the company behind brands like KeywordConnects and GuildQuality, and Huron Capital’s purchase of the Michigan-based home improvement juggernaut 1-800-Hansons.
For firms with hundreds of millions (to billions) to throw around, it begs the larger question: why all of a sudden remodeling?