At 9 a.m. on a Tuesday in late October, as Nathan Hendricks drove to a cupboard set up job in Elk Grove, Calif., he received a name from his workplace. His employer, Reborn Cupboards, had shut down. All its employees had been speculated to return their firm autos and iPads by the next day.
He was not totally stunned. The corporate had modified loads since Audax Group, a personal fairness agency, purchased it in 2022 and added it to a group of dwelling enchancment manufacturers referred to as Renovo Dwelling Companions. It began utilizing lower-grade supplies, pressured staff to purchase their very own protecting gear and pushed them into subcontracting roles, Hendricks mentioned.
“Once I received phrase of this, my coronary heart did sink,” Hendricks mentioned. “My principal concern was, what am I going to do now? Am I nonetheless going to receives a commission and all that?”
He didn’t get his final paycheck, or reimbursement for the $400 he spent on gasoline driving to job websites over the earlier two weeks. About 1,500 staff had been abruptly terminated, together with their medical health insurance. Prospects had been left with unfinished roofs, basements and bogs. Renovo’s web sites, e-mail addresses and social media went darkish. No person answered the telephone.
“I believed Reborn Cupboards was going to be a household firm for years to come back, however they did sort of promote out,” Hendricks mentioned. He discovered work with a small portray firm this week and mentioned he would keep away from personal equity-owned firms sooner or later.
Renovo’s sudden closure reveals how personal fairness possession can go unsuitable for an business that has been flooded with funds searching for to roll up small companies with just a few million {dollars} a yr in income and good reputations of their native markets.
The thesis is straightforward: After gaining efficiencies of scale, acquirers can promote the built-in bundle, or platform, to another person, doubling or tripling their cash. However that wager hasn’t paid off lately. Many home-improvement firms have stagnated as rates of interest have risen and the housing market has slowed.
“There’s been numerous consolidation exercise, a lot of platforms launched, largely by personal fairness funds, however only a few have gotten to that exit,” mentioned Randy Korach, who began a roofing firm, then grew to become CEO of a a lot bigger one when a personal fairness firm purchased it and a number of other others in 2021.
The newly named Roofing Company of America was offered in 2023 to a public firm with a variety of property companies. “There’s in all probability going to be numerous profitable platforms constructed, however in all probability others that possibly didn’t mitigate in opposition to market downturn threat,” Korach mentioned.
Rolled up
Renovo took form in 2022 when the Audax Group, a Boston-based personal fairness agency, began shopping for up family-owned reworking firms that had been leaders of their areas.
Minnesota Rusco had been round for 70 years and was recognized for its catchy tv jingle. Dreamstyle Transforming was based in 1989 in Albuquerque, N.M., by a husband-and-wife staff who amassed a 125,000-person shopper listing. Newpro, which a household began in 1945 as a window substitute enterprise, grew into one of many largest reworking corporations within the Northeast.
They had been amongst seven bought with about $150 million from a number of the largest personal lenders in America: BlackRock, Apollo and Oaktree Capital Administration. By 2022, Renovo ranked eighth on Certified Remodeler’s listing of the biggest dwelling enchancment firms, with 2,700 staff and $653 million in annual income.
Some executives stayed on to assist run their firms, however knitting them collectively proved troublesome. Administration was centralized in a “top-heavy” workplace of people that didn’t all have expertise in dwelling enchancment, mentioned Melanie Marfoglio, who was vp of Reborn Cupboards when it was acquired and stayed with the corporate till July.
“The execution was all unsuitable, as a result of they didn’t take into accounts particular person cultures,” Marfoglio mentioned. “These are totally different prospects, too, so a one-size-fits-all doesn’t actually work.”
Price reducing drove away high performers, mentioned Douglas Elam, a challenge supervisor for Dreamstyle from 2021 to 2023. He left for one more personal equity-owned reworking firm that closed in 2024, then rejoined Dreamstyle this yr.
“The most important expenditure is labor, so they begin renegotiating with the installers and say, ‘The ten to 12% you had been making is now going to be 8,’” Elam mentioned. “The A staff walks out the door, and we’re left with the B’s and the C’s. So high quality went down, and complaints went up.”
On the identical time, larger costs for labor and supplies put stress on prices. Greater rates of interest dissuaded owners from shifting, which weighed on the sort of reworking exercise that occurs when homes change arms.
“Renovo regarded actually good on the floor,” mentioned Aaron Toomey, a managing director at Anchor Peabody, an funding advisory agency for the constructing business. “Everybody who watched this business or thought of it rigorously knew that the post-COVID increase was pulling numerous demand ahead.”
Though Dreamstyle was the worst performer, the opposite firms began faltering too, as aggressive enlargement plans didn’t pan out and the corporate went by means of a number of layoffs. Certified Remodeler reported the corporate’s revenues dropped to $449 million in 2024. The lenders acknowledged that Renovo wasn’t making debt funds as scheduled in late 2024, and in April 2025, BlackRock basically foreclosed on Audax, wiping out its fairness curiosity.
BlackRock tried to restructure Renovo with new executives and extra funding in integrating inside programs, and mentioned its efficiency had improved. Within the fall, BlackRock put the corporate up on the market.
However there have been no presents. On the night of Oct. 27, Renovo executives had been advised that the corporate was out of cash and that BlackRock wouldn’t put any extra in. The following morning, they advised their direct stories, who broke the information to everybody else, together with Hendricks in Northern California.
Telling employees on the firm’s name facilities was significantly troublesome as a result of many labored paycheck to paycheck, mentioned Doug Herring, the previous vp for inside gross sales. He had been requested to set objectives for the following yr, had simply signed a contract with a brand new vendor and had been authorised to rent new staff.
“This actually got here out of nowhere,” Herring mentioned. “I’ve been doing this 30-plus years, and I’ve by no means seen something like this.”
A couple of days later, Renovo filed for chapter, searching for to dissolve the enterprise quite than reorganize it. Its petition listed lower than $50,000 in belongings and greater than $100 million in liabilities, with a whole lot of collectors. Based on screenshots considered by The New York Instances, Renovo processed a final spherical of payroll for headquarters staff however not for employees at its subsidiaries.
“BlackRock dedicated substantial assets to help Renovo’s turnaround in an effort to handle investments we make on behalf of our shoppers,” mentioned Patrick Scanlan, a spokesperson for the corporate.
“Regardless of the efforts by BlackRock and different traders to stabilize the corporate, vital efficiency and money circulate challenges persevered, and a sale course of discovered no consumers. This in the end led the Renovo board to find out that liquidation was the one viable choice for the corporate.”
“An all-in, full-frontal assault”
Non-public fairness is a copycat business. Within the mid-2010s, corporations bundled up contractors from heating, ventilating and air con; pest management; and plumbing, which promised recurring income and appreciable economies of scale. Many contractors, like Renovo, have been consolidated into platforms with totally different companies that may be promoted to prospects as soon as they’ve tried one.
Roofers are the most recent vogue. Though owners don’t want a brand new roof fairly often, it’s additionally not one thing they will defer, which suggests it’s much less topic to the ups and downs of the housing market. Demand is growing as damaging storms develop into extra frequent and insurance coverage necessities tighten up.
After a five-year acquisition spree, personal fairness teams personal many of the largest roofing firms within the nation, in line with Roofing Contractor journal’s high 100 listing.
Josh Sparks took personal fairness funding for his roofing firm in 2021 and has since accrued 25 manufacturers below the umbrella Infinity Dwelling Companies.
“It has been an all-in, full-frontal assault,” Sparks mentioned on a roofing business podcast. “Anyone who owns a roofing firm or, heck, anybody who has an organization that begins with the letter R, they’re being solicited by personal fairness corporations.”
Sparks mentioned there could possibly be trade-offs. “They are going to deploy the personal fairness 101 mannequin, which is what all people’s afraid of and needs to be afraid of,” he mentioned. “My query is, what worth does that create for the client?”
Sean Shapiro offered his roofing firm to a personal fairness agency in 2021 and now serves as a dealer for different roofing firm homeowners trying to promote. Even with financial stress mounting on dwelling enchancment firms, Shapiro mentioned, he doesn’t see personal fairness’s urge for food abating.
“They’re utilizing different folks’s cash for probably the most half, in order that they’re nonetheless going to go deploy it even when they don’t seem to be as bullish on that business,” Shapiro mentioned.
Erie Dwelling was based in 1982 in Toledo, Ohio, and purchased by Gridiron Capital in 2021. Quickly after, Erie pushed out a few of its long-tenured executives. Unhealthy evaluations describing high-pressure gross sales techniques piled up.
Harrison Dilthey, who labored as a salesman in Erie’s Boston workplace in 2023, described the corporate’s techniques as predatory. Halfway by means of his time there, Erie diminished the share of gross sales it will pay in commissions. That prompted representatives to open with a suggestion considerably larger than the true value, Dilthey mentioned.
“The stress of promoting and the tradition there was actually poisonous,” he mentioned. Churn was excessive. Though he made $70,000 in 5 months and was among the many firm’s high performers, he mentioned, Dilthey left after 5 months as soon as he had paid off his pupil loans.
In September, Gridiron offered Erie to a different of its portfolio firms, Leaf Dwelling, the second-largest reworking agency within the nation, with $1.8 billion in gross sales. The corporate took on $4 billion in fairness funding and debt from Apollo and Ares Administration to finance the transaction.
“The help and experience of our funding companions have allowed us to construct a resilient, sturdy and sustainable group that can proceed delivering premium services to owners for a few years to come back,” mentioned Jenilee Frequent, CEO of Leaf Dwelling.
Doug Farr, who labored for Erie for 20 years, left when Gridiron took over. He opened his personal firm, Nice Lakes Transforming, and isn’t trying to promote. However he mentioned it was getting more durable to compete in opposition to personal equity-backed rivals with money to pour into recruiting, expertise and promoting.
“Then you definitely’ve received little previous me, and I’m preventing that,” Farr mentioned. “It’s much more troublesome right this moment as a result of the business is stuffed with a bunch of personal fairness cash being thrown all over the place.”
