- The home services sector continues to grow, fueled by a number of consumer behavior shifts.
- Exterior services providers are positioned to capitalize on these trends, creating high-value opportunities for investors.
- Ned Stevens, a recent Harris Williams client, showcases several key traits of best-in-class companies.
Featuring strong and steady demand drivers, including a shift to suburbs and single-family homes, increasing millennial homeownership, and an aging population, the home services sector continues to provide valuable opportunities for investors.
Here, senior bankers from the Harris Williams Consumer Group share what’s driving investor interest in the space, why exterior home services are particularly attractive, and how Ned Stevens has become a market leader.
An Outside Opportunity
From break-fix, non-discretionary services to recurring maintenance, consumers see the value in outsourcing home-related tasks to the experts. In fact, 51% of consumers are more likely to hire a home services provider than 2-3 years ago, while fewer than 10% are likelier to perform these services themselves (Read the Full Report).
Exterior services are particularly well suited to capitalize on this rising “do it for me” trend. These tasks are time-consuming and physically demanding, furthering the likelihood that consumers will outsource them.
Due to these factors, the exterior services space is large and growing quickly. It also has several attributes that attract M&A investor attention. “Exterior home services tend to be subscription- and route-based services that experience consistent, recurring demand,” says Spiller. “From a provider perspective, these types of jobs don’t need to be scheduled in advance, allowing for more efficiency, denser and more efficient routes, and stronger margins.”
In addition, across the exterior home services market, there is significant whitespace for companies to expand their customer bases in existing markets, grow into new areas throughout the U.S., and widen their service offerings into complementary, adjacent services.
There’s also an education gap among homeowners on the importance of exterior services and regular maintenance. “The value of these services is not widely known, and penetration is low. However, there is high purchase intent among educated consumers. An opportunity exists to drive more awareness and capture a larger potential market,” explains Ledwith.
Lastly, the exterior services subsector is highly fragmented, offering opportunities for consolidation and repeatable tuck-in acquisitions, and for scaled platforms to differentiate through professionalization, customer service, and scale.
Gutter cleaning is a prime example: It’s a multibillion-dollar market with steady growth and a substantial addressable market of adjacent services. “There are many opportunities for investors to back businesses in large, expanding residential services sectors with long-term demand drivers and multiple ways to grow,” notes Neuner.
Ned Stevens: A Large Customer Base With Room to Expand
Ned Stevens is a best-in-class provider of gutter cleaning, maintenance, installation, and repair services for homeowners. By leveraging its scale, broad geographic reach, and variety of service categories, the company has developed into an industry leader and national player.
Driving organic growth is its core gutter cleaning service, featuring subscription-based service plans, strong retention, and consistent customer acquisition. “Customers that understand the benefits of gutter cleaning have a high purchase rate and long-term demand. This creates significant customer lifetime value and the ability to offer them other services,” explains Spiller.
Ned Stevens capitalizes on this established customer base by providing a range of adjacent exterior services, including mosquito control, power washing, and cleaning services for siding, roofs, dryer vents, and windows. “All its services match consumer demand for hands-off home maintenance and lend themselves to set-it-and-forget-it subscription programs, leading to high customer satisfaction and retention,” says Ledwith.
A thoughtful approach to M&A has helped the company support key areas of long-term growth, including core service development, geographic expansion, and extension into new services.
“Ned Stevens takes a sophisticated and proven approach to growth,” says Spiller. “The company enters new markets across the country through M&A, utilizes a highly trained sales team, and develops more route density through its superior scale.”
In a challenged labor market, greater scale provides even more benefits, adds Ledwith: “With its scale, professionalism, and infrastructure, Ned Stevens can better manage and retain a large, skilled workforce while continuing to grow and develop its competitive advantages.”
Recurring Demand, High Growth
With powerful consumer trends driving the sector, home services businesses provide investors with wide-ranging value-creation opportunities. Exterior services, in particular, are well positioned for growth due to their recurring, non-discretionary, and unscheduled nature, and their sheer variety. “In addition to gutter cleaning, there are a wealth of attractive exterior service categories primed to deliver value, including lawn treatments, pest control, pool service, roofing, and others,” says Ledwith.
Companies poised to win in this space will offer technical, skilled services and a variety of value-added offerings while taking advantage of scale and a broad geographic footprint. “The best exterior services platforms provide a level of quality that drives consistency,” says Spiller. “Investors should look for businesses generating top-notch customer satisfaction through frictionless and convenient experiences built around better technology, talent, and processes. Those are the companies that will successfully benefit from the growth opportunities in this subsector.”
To learn more, please contact our senior bankers.
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