Does anyone have experience in the custom closet and cabinet industry?
November 08, 2024
by a searcher in Amagansett, NY, USA
We’re looking hard at a deal in the space and would love to speak with anyone who has spent time in the industry and can give us insights on the sde multiples and key diligence areas. The business is mainly new construction today and operates at around a 33% sde margin.
from University of Florida in Washington, DC, USA
Lenders dislike new construction, and obviously increased risk there. In the metros I looked at, many of the custom home builders also did major remodels, so the cross sell for new construction and remodel was pretty easy.
Some things to think about/look for:
--Use of design software and CNC are key opportunities for modernization (both for production and sales motion).
--Split of hardwood and plywood cabinets can be insightful.
--Quality of finishing area/process
--Identify any bottlenecks/limiting factors in overall production process (often finishing)
--If growth is an objective, consider available physical space/etc.
--Overall sales motion and who primarily executes it.
--Margin on install vs subbing that out.
Overall, the ones I looked at seemed like fairly simple, straightforward businesses...the core workflow is really only a few steps (sell the job, design the cabinets, buy the wood, cut the wood, paint, assemble, deliver, possibly install). If the design software is good, the level of skilled labor required is not super high. Happy to chat further if helpful!
from Portland State University in Fort Lauderdale, FL, USA