Brad Jacobs, the Connecticut investor who built XPO Logistics into a freight transportation powerhouse and then published a memoir titled “How to Make a Few Billion Dollars,” is now turning his sights on the building products distribution industry, Jacobs said today.
Jacobs announced last week that he had compiled a $1 billion acquisition budget, purchased a software firm called SilverSun Technologies to act as a holding company, and would soon announce a target industry for making “significant acquisitions.”
The wraps are now off that secret target, and Jacobs says he plans to rename SilverSun as QXO Inc. and begin a strategy of “accretive M&A and organic growth” that will create at least $1 billion of revenue by the end of its first year, $5 billion within three years, and tens of billions of dollars over the next decade.
According to Jacobs, QXO can hit those aggressive goals because the massive building products distribution sector—which is valued at approximately $800 billion in annual revenue between North America and Europe—has only nascent use of technology, particularly artificial intelligence (AI) and B2B e-commerce. That industry is also highly fragmented, with approximately 7,000 distributors in North America and 13,000 in Europe, and it has enjoyed a healthy compound annual revenue growth rate (CAGR) of 7% over the last five years, he said.
“QXO’s strategy is to create a tech-forward leader in the building products distribution industry through accretive M&A and organic growth, including greenfield openings, with the goal of generating outsized stockholder value,” Jacobs said. “We expect to achieve a revenue run-rate of at least $1 billion by the end of year one, at least $5 billion within three years, and tens of billions of dollars over the next decade. QXO’s scale should elevate the customer experience, increase sales force effectiveness, and enable margin expansion.”
Specifically, the industry includes distributors of building products that offer materials, finished goods, value-added solutions, and expertise to a broad range of customers across the residential, nonresidential, industrial, and infrastructure end-markets. Their products are used in new construction and in repair and remodeling. Key categories include access control, construction supplies, doors and windows, electrical components, fencing and decking, HVAC, infrastructure, landscaping, lumber, plumbing, pools, roofing, siding, and water, among others.
