Adams: So our model is pretty simple. We find these great companies—we're not looking for depressed assets or companies in need of a turnaround—companies that have good track records, stable customer bases and a solid foundation, but that need help to get to the next level.
What I mean by that is, a lot of the of these owners are really distracted by the back office, things like payroll and legal and insurance, the administrative things that consume a lot of their time and bandwidth. With our platform we centralized a lot of those back-office functions and allow them to focus more on growth and serving their customers. We put systems in place and also offer technology that allows their technicians to be more efficient, more effective.
Then we share best practices amongst all the businesses. You'll find that one business may be great at a certain aspect of what they do and other businesses are able to benefit from that as well.
CONTRACTOR: When a company joins Grizzly MEP, do they take on your branding, or do they still operate under their own separate identities?
Adams: The brand stays completely intact. I'm more focused on integration and driving growth than I am rebranding. And lot of times rebranding can create customer confusion.
What will happen, six months or a year down the road, is X Mechanical will become X Mechanical: A Grizzly Company. That way when we’re going after, say, a national contract, and someone asks, well, how can you service me in a market where you don't reside? We can say, well, there are all these various companies that are all part of the Grizzly family.
CONTRACTOR: Why do you think there’s so much consolidation happening in the mechanical contracting industry, in the MEP trades?
Adams: I'm not a member of a private equity firm, I'm an operator. But from what I've seen, a lot of private equity groups are saying, hey, the industrials are a great sector because they're always in demand. It’s a necessary part of commerce and society.
Now, in the MEP space, a lot of these sponsors are seeing that residential side is a bit more sensitive to economic fluctuations, whereas on the commercial side having properly operating systems is mission critical. They're less sensitive to those economic changes than the residential side.
So, we're seeing a lot more focus in the commercial sector—buyers have gotten a much more comfortable with the overall model. I don't want to say [the commercial side] is recession-proof, but it's highly insulated.
CONTRACTOR: You mentioned technology as one of the keys to growth. With so many platforms, so many systems—often multiple platforms in a single company—how are you handling integration?
Adams: We're in the process right now of selecting systems, both financial and operational, that we will implement across the entire enterprise, because we want everyone on the same platform. It gives us the ability to communicate better. It gives us the ability to operate better, gives us the ability to share best practices, leverage our size and perform.
I want to be clear, this isn't about buying a bunch of companies, putting them together, stripping out costs, repackaging them and selling them to make money off the arbitrage. We’re taking these companies, we're integrating them, and we're centralizing some of the back-office work to get costs out of the system. Then we can leverage our buying power for things like insurance and benefits and vehicles and technology—things that a standalone business would not be able to do.
That’s how we drive profitability. And then as we change the sales model and get more externally focused, it gives us the ability to really get these businesses performing at higher levels. The tech stack is going to be a very big part of that.
