A Merger and Acquisition Approach to Remodeling

Marc Black and Zak Fleming say their unique business model serves as a hiring and growth strategy. And it seems to be working for them.

January 27, 2022
remodeling contractors

The full Remodeling Contractors team

Remodeling Contractors has an unusual growth strategy for a design-build remodeling company, yet it seems to be working.

Owners Zak Fleming and Marc Black nearly doubled revenue for the Des Moines-based remodeling firm between 2018 and 2019. How did they do it? Through mergers and acquisitions.

Founded by Fleming in 2001, the company was originally called Fleming Construction. Over time, Fleming—who was only 23-years-old when he started the company—gained a reputation in the local market. Yet obstacles were standing in the way of continued growth.

“Everybody for years has been complaining about how we can’t hire qualified people,” says Fleming.

A Natural Choice

Mergers and acquisitions were happenstance in the beginning. Coming from a collaborative remodeling community in Des Moines, Fleming knew many quality professionals in the industry he would have loved to one day work with. He ended up able to do so.

“When I got into it, all the people I wanted to do it with were friends of mine that I wanted in the industry,” says Fleming. “They were good at managing their companies, and it dawned on me that it would be better to work together rather than compete with each other. … It wasn’t a strategy. It was more a necessity at first.”  

“I didn’t acquire these people. I gave up some of the company to these people.”

Fleming’s first acquisition was of Donna Alley’s Imagine Interior Art and Design in 2016. Fleming worked with Alley steadily and found he had more projects than she had time, which justified making her a part of the company. Next came TechBuilders of Iowa in 2017. The owner, Scott Spetman, thrived in sales and had known Fleming for a decade. Fleming recalls those first mergers almost as accidents, but when Black joined as co-owner in 2018, the two fine-tuned those “accidents” into a full business and recruitment strategy.

Other acquisitions soon followed, including Ridgeline Construction and DB Building both in 2018, Heartland Gallery West in 2020, and Remodeling Contractors also in 2020. That most recent acquisition spurred the name change.  

With those purchases came sales specialists, a new crew, a handyman division, and a custom framing service. Unsurprisingly, the strategy also brought revenue. The company hovered at around $1.5 million in 2018 and 2019 but projects $3.5 million for 2022.


RELATED: With This Business, I Thee Partner


remodeling contractors

Co-owners Zak Fleming and Marc Black

One Business, Many Leaders

While these mergers have proven successful for Remodeling Contractors, the new people have also meant new philosophies.  

“Decisions are made as a team, and the company advances as a team,” says Fleming. “I didn’t acquire these people. I gave up some of the company to these people.”

He and Black explain that Remodeling Contractors runs as a group of largely autonomous departments where each person runs their area as if they still owned the company. Vertical and horizontal integration play into the strategy too. Horizontal integration focuses on acquiring independent business owners to help round out the team, explains Black.

Vertical integration finds ways to bring different trades in-house, helping the company gain greater control while improving margins.

One dream of Fleming and Black’s was profit sharing, which they can happily say they’ve achieved, adding that it’s a rare benefit in the remodeling industry and one that’s attractive to future employees.

“The main thing I love about the strategy is everybody is so experienced and so mature that it makes it really easy to operate,” says Fleming. “Low stress levels, everybody knows what we’re doing, and they’re really appreciative that we took [the stress of ownership] away from them.” 

About the Author


About the Author


Caroline Broderick is the Managing Editor for Pro Remodeler. Most recently, she served as the associate editor for PR's sister publications, Pro Builder, Custom Builder, and PRODUCTS where she covered design, building products, trends, and more in the residential construction industry. She can be reached at cbroderick@sgcmail.com.  

Comments

Comments

I belive this is the path to growth, well done!

I'd love to know 1) what they paid for those other businesses and 2) how they arrived at a valuation & purchase price.
Was it a multiplier of gross sales or what? Did they promise to keep all the existing employees on? This is very interesting,

Add new comment

Overlay Init