How SRS Distribution Became an Attractive Acquisition Target for Home Depot
On Thursday, Home Depot said it’s acquiring SRS Distribution in a $18.25 billion deal.
SRS Distribution is one of the fastest-growing distributors of building products in the U.S. It serves various trade verticals, including professional roofers, landscapers, and pool contractors. According to Forbes, it reported $9.6 billion in revenue in 2023, up from $8.6 billion in 2022.
Home Depot’s customer base comprises about 50% pros—contractors, roofers, and home professionals—and 50% do-it-yourself (DIY) customers. The acquisition represents Home Depot’s latest and most significant bet to attract more pros as the DIY pandemic-era home improvement boom winds down.
SRS Distribution capitalized on several industry trends to outpace its competition, making it an attractive acquisition target for Home Depot, per Webb Analytics.
Roofing consolidation
The roofing distribution vertical is in the late innings of consolidation. Most of SRS Distribution’s national roofing footprint came from acquisitions of small independent, family-owned operations that they helped grow through several advantages to consolidation – increasing buying power, financial assistance, and expanded resources around talent management.
Spanish as the primary language
The various trade professionals they serve—professional roofers, landscapers, and pool contractors—are trending towards Spanish as the primary language. SRS Distribution made a concerted effort to hire more Spanish-speaking workers so they have someone ready to sell at each branch, and they added Spanish translation to every marketing piece and warranty.
Software tools
Lastly, they recognized the need to build software to help the trade professionals they serve to find leads and provide financing options to their end customers. SRS Distribution’s ProFund software mines social media for data their trade professionals can use to target prospective customers with ads and allows them to offer pre-approved, low-interest monthly loans to their end customers based on their neighborhood and address.
While Home Depot is the talk of the town, the story should focus on SRS Distribution’s impressive execution and strategy for reaching this scale in a low-margin industry.
