Who is SRS Distribution?
And, why did Home Depot just pay $18B for them?
Hi everyone and Happy Easter!
What a crazy finish to the week – and no, I’m not talking about my 1 year’s old birthday on Good Friday.
I’m of course talking about the $18.5 billion acquisition of SRS Distribution.
So, who is SRS?
Think of SRS as a holding company for a lot of individual B2B distributors. If you go into different parts of the country, you won’t necessarily see the SRS logo – instead, you’ll see the names of roughly 50 different local, regional B2B distributors. In the past 2 years, SRS has made at least 8 acquisitions of B2B distributors as a key driver of growth. They’re one of the largest roofing distributors in the country and they are also a top distributor of landscape and irrigation materials.
They have grown revenue quite dramatically in the past 5 years. With an estimated revenue growth from $2.5B in 2019 to finishing 2023 with a little under $10B revenue.
Also to note, SRS loves America and our vets. Their charitable efforts put a strong emphasis on helping those who have served and it’s great to see.
Why did Home Depot Buy a Roofing Distributor?
There are a variety of synergies that the combined Home Depot SRS can capture – but I suspect the strategic gap in Home Depot’s arsenal is geared towards the part of the market which has been harder for them to penetrate: production builders and national accounts.
Home Depot has made a lot of headlines with their focus on moving into the Pro market. Their digital investments have been well received with consumers, DIY’ers and also Pros that work on smaller projects – custom builders, R&R (repair & remodel) and those kinds of jobs.
However, national account buyers don’t view Home Depot as a go-to supplier for all their construction supply needs. They are viewed differently than B2B distributors who have hundreds of branches, trucks, and warehouses to get materials to the job-site on-time and with reliability.
Enter: SRS Distribution.
Use SRS’s Infrastructure, Home Depot’s Digital and Political Leverage to Win National Accounts
It’s likely that Dan Tinker and Ted Decker are on a roadshow to sit down with all the largest national accounts in the country – such as the top production builders especially the ones buying more and more direct – as well as the largest contractors. And, explain to them how a combined Home Depot and SRS will allow the production builder or large contractor to buy everything they need for their projects from one place, with the best digital tools and the proprietary infrastructure to deliver directly to the jobsite.
Nuts & Bolts Synergies
Hub and Spoke
Home Depot has been building new distribution centers for the needs of Pros, launching 4 more DC’s just this month.
