Middle Market Company of the Month

Installed Building Products

 IBP is the second largest insulation installer serving the residential new construction market in the United States. They have 125+ locations servicing 48 states and are a leading installer of garage doors, rain gutters, closet shelving, shower doors, mirrors, fireplaces and bath and door hardware. NCMM had the chance to speak to Jeff Edwards, the CEO of IBP, to learn about the company’s history, growth, and the opportunities they have working in the middle market. 

Tell us a little bit about IBP. What are the origins of the company and how has it evolved over time?

IBP started as a single location, insulation installer in Columbus, Ohio.  It was a business that my father acquired in the mid-‘70s and held in his portfolio of businesses.  It ran well as a single location for quite a while.  In the mid-‘90s, I started reviewing the family’s portfolio of businesses and realized there was a great opportunity with this Columbus Ohio insulation installer.  Shortly thereafter, I began the strategy of growing the business with an acquisition of a local shower, shelving and mirror installer.  In 1998, we completed our first out of state acquisition in the insulation market and really started the ball rolling on our acquisition strategy.  To date, we’ve completed over 100 acquisitions, focused primarily on insulation and other complimentary product installers in the new single-family construction end-market throughout the U.S.  Early in 2017, we completed our largest acquisition to date, adding end-market diversification through an acquisition whose focus is predominately installing products in large commercial construction projects.  We are now the second largest installer of insulation and complimentary products, with more than 135 location in the U.S.  While single-family new construction continues to be the largest end-market we service, we have strong share in multi-family and commercial construction, as well as repair and remodel.


What is the competition like for IBP, and how does the company differentiate itself?

Construction is a very localized industry.  We go to market with more than 100 tradenames throughout the U.S.  Having  grown via acquisition, it was important to me that we maintain the cultures and identities of the businesses we acquired.  Since these were typically family owned businesses, maintaining that local brand identity and commitment to service was very important to continuing their success post-acquisition.  As a result, we’ve been able to support and maintain that high-quality service level that our customers appreciate and expect.  All of the credit for our continued success really goes to our teams in each local market.  Their continued hard work and dedication to service enables us to maintain strong relationships with our customers throughout the U.S.

 

What does IBP do to foster growth for your current employees and how do you approach recruiting new talent?

Like most businesses in the construction industry, our installer turnover is much higher than I would like.  Companywide, we are focused on labor every day.  Recruiting, training and developing our employees is critical to maintain the high-level of service our customers expect.  Making our job more difficult, insulation isn’t a pleasant product to install, so most of our turnover occurs shortly after we hire someone.  Once an employee reaches 6 months with the company, they typically stay awhile.  Our installers are paid based on production pay and complexity of each install job.  As they learn the job and their skill level increases, their pay increases.  You wouldn’t expect it, but an insulation installer is one of the higher paying construction jobs, consistent with some of the more skilled construction trades, like electricians and carpenters.   Since we provide our own training, we are able to hire people new to the trade and provide them the opportunity and training to grow.

In addition to training, we offer a full host of benefits and have recently introduced a financial wellness program.  This program enables our employees to learn about personal financial matters, helping them to establish savings accounts, manage personal debt and save for the future.  I am excited about this program and I hope that it helps our employees live better professional and personal lives.

 

We know that IBP’s industry is heavily dependent on new homes being built, how do you mitigate the risk from downturns in the economy?

It’s a reality that our industry is cyclical in nature.  While residential construction will continue to be a significant portion of our business, I believe the 2017 acquisition of Alpha Insulation and Waterproofing will help us level some of the cyclicality.  Alpha represents somewhat of a departure from our previous acquisitions, which were primarily focused toward residential construction installers.  Alpha’s install services are predominately into large commercial construction projects, such as stadiums, airports and high-rise office buildings.  This end-market is less cyclical than the residential construction market and Alpha provides us with a strong platform for further growth in this large commercial construction end-market, both organically and through additional acquisitions.  I am excited about adding Alpha to the IBP team and the additional opportunities that it provides for growth in this end-market as well as adjacent markets.

 

Can you explain the rationale for acquiring Alpha Insulation and Waterproofing, and what growth opportunities it provides for IBP?

As I mentioned, Alpha’s customers are primarily in the large commercial construction market.  While we historically have serviced the commercial end-market, we were mostly working on smaller, wood-framed buildings.  Since the general contractors building these large commercial projects are more national in focus, Alpha’s relationships with these contractors allow us to effectively address this market on a larger scale, due in part to our national footprint of existing installers.  I expect this will enable us to grow the end market organically.  Alpha’s expertise and leading market position also provides us with an avenue for further acquisitions within the end-market, both from a new products perspective and similar installers with different customer bases.

 

What advice do you have for other middle market executives looking to grow their business?

I think the best advice I can give is to focus on the people.  IBP is successful because of the team we have in place.  At every level of the organization, we have people who are working to be successful both professionally and personally.  It’s my job to make sure they are in the right roles and that they have the opportunity to be successful every day.  In a small company, one person can do a lot to grow the business but as the company gets larger, it has to be a team effort.

 

What’s next for IBP? What are you most excited about?

There is a lot of be excited about at IBP.  So far, 2017 is off to a great start.  We continue to see positive news around housing construction and we are well positioned to benefit from the continued recovery.  We are actively pursuing additional acquisitions, which will expand our geographic footprint, product offerings, and end-markets. 

 


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