Deal Snapshot: Visual Comfort & Co.

Visual Comfort & Co. is the premier branded resource for decorative and functional light and ceiling fans. The company has a leading position in popular, premium, and ultra-premium lighting segments, as well as a unique omnichannel model. Harris Williams recently advised Visual Comfort on its investment from Goldman Sachs Asset Management and Leonard Green & Partners.

Here, members of our Consumer and Building Products & Materials Groups discuss what makes the home furnishings industry ripe for continued growth. They focus on why lighting is a compelling subsector and what made Visual Comfort an attractive investment. They also explore what other buyers should know about this space.

What is appealing to buyers about home furnishings, especially in the lighting industry?

Neuner: We’re seeing sustained demand for all things home-related, including furnishings. Households are investing more money in renovations, and remodeling activity has increased. Harris Williams research shows that spending is set to continue post-pandemic. In fact, around 80% of consumers are planning to perform home renovations over the next one to two years.1

Benjamin: The residential lighting subsector in particular has several positive traits that are driving investor interest. It’s a multibillion-dollar market growing in the mid-single digits each year. New housing activity is helpful to the category, because lighting is one of the few products that has to be installed in a new home before a consumer can even obtain a certificate of occupancy. However, renovation and remodel activity is driving overall growth. Homeowners can install updated lighting fixtures as a high-impact, relatively low-effort way to refresh spaces.

Residential renovation spending has grown steadily over the years and will continue to benefit from a variety of secular tailwinds, including increasing household formation and disposable income. In addition to strong, steady growth, lighting companies tend to generate compelling margins and high free cash flow. Finally, lighting is a highly fragmented industry well situated for buy-and-build strategies.

1 Harris Williams consumer research, 2021

What makes Visual Comfort a particularly attractive asset?

Benjamin: We have been fortunate to work with Visual Comfort & Co. twice, having represented both Visual Comfort and Generation Brands in their respective sales to AEA Investors. Visual Comfort’s founder, Andy Singer, is a visionary in the industry, which he has been steadily transforming since 1987.

Singer introduced branding to a historically unbranded industry. In the past, people had no idea what company made their home’s lighting. With Singer’s guidance, Visual Comfort has become a brand that consumers request by name. One tactic he used was building designer partnerships with well-known names like Ellen DeGeneres, Ralph Lauren, Kate Spade, and Kelly Wearstler.

Ultimately, Singer created an omnichannel go-to-market strategy that includes physical locations, designer and influencer partnerships, and direct-to-consumer marketing. He worked to launch the brand’s Circa Showrooms, 24 locations that only feature Visual Comfort products. Whether in the Circa Showrooms or other retail environments, they deliver a customer experience that feels more tailored and upscale than the typical lighting store, which can be overwhelming for the average consumer.

Ledwith: Visual Comfort also recognized the importance of a robust online presence and optimizing both the education and consumer experience there. The company focused on maximizing digital assets and creating a first-rate website. Through its strategic partnerships with influential designer partners and its own brand, Visual Comfort interacts with over 8 million social media followers, which further enhances brand positioning and awareness. Through all these efforts, the company has taken what was a commoditized sector and built a brand that is top-of-mind for homeowners and professionals. Visual Comfort has built a desirable, differentiated brand similar to Viking or Wolf stoves and Sub-Zero refrigerators.

As a result, Visual Comfort has a leading position in multiple lighting segments, and still has significant room to continue expanding in its fragmented market

What should other prospective buyers know about this sector?

Webb: In terms of building products, we continue to see significant activity and interest from private equity. There are some very positive tailwinds: people wanting to own homes (especially Millennials), migration out of cities, and homeowners re-investing in their houses after spending the past year at home.

Overall, the resilience the sector has demonstrated over the last 12-18 months has attracted investors to the space. They now see building products as less cyclical than before, with some robust long-term tailwinds. Lighting is a specific area of interest, as it’s often updated during kitchen and bath renovations, which continue to be very popular.

Benjamin: Whether you are looking at the broader home furnishings market or the lighting subsector, we have seen investors reward businesses that can stand out in crowded fields. Visual Comfort’s omnichannel approach helped the company create a clear brand and meet the consumer wherever they wanted to engage. By better controlling the path to buyers, whether they’re going directly to consumers, partnering with key influencers, providing in-person retail, or even using the wholesale channel, Visual Comfort was able to grow well more than the overall market. The best brands will cut through the clutter and competition—and recognize how to build market share in fragmented, commoditized industries.

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In addition to covering home furnishings, the Harris Williams Consumer and Building Products & Materials Groups have deep expertise in a wide range of subsectors. Learn more here:
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Building Products & Materials

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