Home Accessory Products Investment Thesis

Our interest in home accessory products is predicated upon the residential renovation, repair and remodel markets growing faster than GDP due to the following:

  • Home values continue to rise since the recession giving homeowners the comfort to reinvest
  • Millennials, who have delayed buying their first home, are expected to form over 2 million households each year from 2015 to 2025 (recent historical average is 1.4 million)
  • Increasing rental property prices have stimulated improvement spending
  • Residential fixed investment is below historical averages allowing room to rise
  • New and existing home sales volume have been steadily increasing since 2009
  • Home ownership rates are the lowest in 50 years and expected to rise
  • Foreclosures are declining but still higher than pre-recession levels
  • Baby Boomers are moving less frequently but spending more on their current home
  • Urban population growth has been driven by growing demand for city living
  • New construction continues to lag

 

Seeking Home Product Companies with these Characteristics

  • Sales $15-$75 million and/or EBITDA $2-$8 million
  • Gross margins preferred: manufacturers +35% or distributors +25%
  • Serving renovation end markets preferred over new construction
  • Custom or semi-custom manufactured products or exclusive distributed products
  • Customers should consist of independent contractors, dealers, and/or consumers directly
  • Limited big box store revenues
  • Headquartered in the United States

 

MCM’s Home Accessory Product Experience

In addition to the aforementioned, we leverage our previously successful portfolio company experiences, current MCM board members home accessory product experience, and relationships with industry executives.

Jeff Lowe, MCM board member and previous CEO of Hardware Resources, has over 30 years of hardware, cabinet, and building product experience. He provides valuable industry insight and serves on select portfolio company boards.

MCM has relationships with industry executives who may be able to act as an integral member of a future portfolio company management team or act as a board member.

tgc logo

 

Torsion Group Corp, acquired in 2016, is a value added distributor and manufacturer of commercial and residential garage door parts and accessories serving OEMs, installers, contractors, and dealers.

 

 

the-louver-shop

 

American Home Products, acquired in 2015, a current investment operates under two trade names, The Louver Shop, louvershop.com, and Danmer Company, www.danmer.com.AHP, with 350 employees, manufactures, distributes, and installs custom plantation shutters and other window treatments directly to consumers primarily in the Southeastern United States and California.

danmer-custom-shutters

 

 

stylecraft logo

 

StyleCraft, a previously successful investment, is a manufacturer of lighting, wall dècor, decorative accessories, outdoor/garden accessories and occasional furniture.

 

 

Industry Characteristics

Businesses serving the renovation, repair, and remodel markets within the residential segment will experience sales growth at an annual rate of 4.7% until 2020, greater than twice GDP. Manufacturers and distributors may create a competitive advantage by providing value-added services such as design and installation resulting in higher profit margins and loyal customers.

 

Customer Analysis

Businesses serving consumers directly and/or serving the “professional” channel (i.e.  architects and contractors) on a national scale with a diverse customer base are highly attractive. Businesses serving the lagging new construction markets will be at the mercy of replacing potentially large project based revenue and may find it difficult to establish recurring revenue streams.