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Driven by strong, underlying trends, the residential services sector continues to be highly attractive for investors.

Within this burgeoning space, the water management services segment—which includes foundation repair, basement waterproofing, crawl space encapsulation, and concrete lifting—is particularly appealing, as it encompasses a range of essential, break-fix home services with non-deferrable demand.

Below, senior professionals from our Consumer Group share why essential home services providers are increasingly coveted by private equity, and how Groundworks, a recent Harris Williams client, has become a leading water management services platform.

The Expansion of Essential Home Services 

Busier with work and family demands, consumers are more often looking to the experts to handle a growing breadth of home-related tasks. Case in point: Spending on home services is growing, with over half of consumers spending more on service providers, and only around 10% spending less (See the full report).

Essential home tasks are especially well positioned to capitalize on this rising “do it for me” trend. These services are vital and highly technical, furthering the likelihood that consumers will outsource them. Services under the water management umbrella, including foundation repair, basement waterproofing, crawl space encapsulation, and concrete lifting, are prime examples.

“There are often serious long-term consequences associated with water management issues, which tend to worsen and become more expensive over time. This causes extremely low deferrability during the sale process,” says Neuner. “For many consumers, a home is their most valuable asset. Once they’re educated about the risks of and solutions for foundation problems, they typically see the importance of hiring an expert and will act quickly,” he continues.

Due to these factors that create non-discretionary and "non-DIY-able" demand, companies specializing in this range of essential residential services are increasingly catching the eye of investors.

Groundworks: Building a Market-Leading Platform 

Groundworks, a recent Harris Williams client and the nation’s largest water management services company, showcases several sought-after traits that made it a leader in the space.

Groundworks is focused on the essential, need-based segment of residential services. This double-digit billion-dollar market is large, expanding, and highly fragmented, providing the company with substantial opportunities for consolidation and platform building. Through its proven playbook for organic and acquisition growth, it has developed into one of the most scaled operators in water management services.

“Groundworks has many ways to drive growth, with a long track record of doing so. It’s successful and prolific on the acquisition side, while creating organic expansion through an effective de novo strategy,” notes Spiller. He points out that the dots it’s adding to the map organically are quickly generating a meaningful impact, with many branches often ramping up to multimillion-dollar revenue within a year. “The Groundworks team is heavily invested in its fully integrated platform and the necessary infrastructure to continue supporting this level of growth at each branch,” he says.

Meanwhile, Groundworks is regularly diversifying its offering to include ancillary services within water management, such as plumbing and gutters, helping it to gain a greater share of wallet.

For these types of services, Groundworks’ best-in-class consultative sales process is critical. “Compared to other residential services, the symptoms of foundation repair or basement waterproofing problems may not be obvious to homeowners,” explains Ledwith. “To help them understand the issue and its potential consequences, Groundworks uses a consumer-oriented, in-home sales strategy that’s tailored to a customer’s needs.”

Each salesperson is a trained expert in Groundworks’ array of services, with a deep understanding of technical engineering solutions to accurately diagnosis the problem, identify the ideal fix, and develop a custom plan for every customer. “Through this approach, Groundworks drives greater trust, converts more sales, and builds long-term customer relationships,” he adds.

Groundworks also prides itself on an employee-first culture, which is a significant value driver for the business. “The company’s goal is to elevate its tradesmen and tradeswomen by creating attainable career paths for technicians and field workers, while providing plentiful opportunities for management roles,” says Villar. “In addition, as a part of the KKR acquisition, every employee now has equity in the company, which is highly unique for a business with this structure and scale.”

An Eye on the Essential

Across residential services, consumers see the value in outsourcing home-related tasks to the experts. Within this expanding market, essential home services are particularly appealing to investors due to their non-deferrable nature.

Groundworks is a unique company in the space that’s rapidly growing while evolving the water management services segment. Through its differentiated business model, scalable infrastructure, and passionate team, the company is poised for continued success.

To learn more about high-value M&A opportunities in essential residential services, please contact our senior bankers.