A serial B2B entrepreneur is creating a digital technology services and distribution company with a goal of quickly dominating the heating, ventilation, and air conditioning (HVAC) and building products market.
Brad Jacobs, managing partner, Jacobs Private Equity.
And the entrepreneur, Brad Jacobs — who says he has completed approximately 500 merger and acquisition deals in his career, and built five multibillion-dollar, publicly traded companies — is counting on B2B ecommerce and digital transformation technology to help him pull it off.
Yesterday, Jacobs unveiled QXO Inc. as a digital technology company with plans to build and acquire distribution companies. Jacobs says he’s targeting the highly fragmented $800 billion North America and Europe building products distribution market.
QXO follows several other companies Jacobs has been involved in launching: XPO Inc., one of the largest providers of truckload services in North America, where he is executive chairman; GXO Logistics Inc., a global contract logistics provider using “data-driven processes, intelligent automation and machine learning” technology; RXO Inc., a technology-enabled freight brokerage platform; United Rentals Inc., a big equipment rental company; and United Waste Systems Inc., a large waste management company which was later sold.
Distributors of building products sell such categories as access control, construction supplies, doors and windows, electrical components, fencing and decking, HVAC equipment, landscaping, lumber, plumbing, pools, roofing and siding, and water.
Jacobs says he expects QXO to achieve revenue of at least $1 billion its first year in business and $5 billion within three years. To hit those numbers, the company says it will focus heavily on digital technology — and B2B ecommerce.
To create QXO, Jacobs Private Equity, which is led by Jacobs, has entered into a $1 billion investment agreement with other investors and SilverSun Technologies, a public business management applications and technologies and professional consulting services company. The proposed investment is comprised of $900 million by JPE and $100 million by co-investors, including Sequoia Heritage, JPE says.
Targeting the fragmented building products industry
Under the terms of the investment, SilverSun will be renamed QXO and Jacobs will become the company’s chair and chief executive officer.
“The industry’s nascent use of technology, particularly artificial intelligence (AI) and B2B ecommerce, represents a compelling opportunity for tech-focused entrants,” Jacobs Private Equity says. “According to industry data, the percentage of industry revenue derived from ecommerce is currently only mid-single digits, and this share is expected to triple by 2030.”
JPE notes that the building products distribution industry is highly fragmented, with approximately 7,000 distributors in North America and 13,000 in Europe.
“The industry has generated compound annual revenue growth of 7% over the last five years, based on industry data, and continues to benefit from powerful secular growth drivers for building products distribution in the residential, nonresidential and infrastructure sectors,” JPE says.
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