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06/29/2021

A digital deal for Builders FirstSource

The largest U.S. pro dealer is acquiring WTS Paradigm, a software solutions and services provider for the building products industry.
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America’s largest pro dealer is taking a step forward when it comes to the technological and digital services it provides for its residential construction customers.

Builders FirstSource announced that it has entered into a definitive agreement to acquire WTS Paradigm, LLC (Paradigm), a software solutions and services provider for the building products industry.

The move is a cash transaction valued at approximately $450 million, Builders FirstSource said, noting that the acquisition is an important step forward in its strategy to invest in innovative digital solutions.

Paradigm serves about 250 customers with more than 70,000 end users, including manufacturers, retailers, dealers, home builders and remodelers. The company is expected to generate revenue of approximately $50 million in 2021.

Offerings from Paradigm include ERP, virtual home design, and quoting software, along with a contractor sales app, among other industry solutions.

 “Purchasing Paradigm is an important step in advancing our digital strategy to create significant construction process efficiencies through prudent investments in innovative technologies,” said Builders FirstSoure President and CEO Dave Flitman. “Home construction lags far behind other major industries in the adoption of modern tools that can save time and money and reduce waste.”

The pro dealer and home builder industries have been criticized for their failure to move forward with new technology when compared to other industries.

According to Builders FirstSource, the average residential construction project is difficult to manage, involving over 60 material suppliers, 100 sub-contractors and many service providers. The dealer says driving construction process efficiency is an excellent opportunity for digital technologies.

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"Our unmatched scale, industry relationships and technical knowledge uniquely position us to increase the adoption of digital solutions across a fragmented customer base," Flitman added. "Paradigm’s powerful technology platform provides us with an enhanced customer value proposition, helping fuel long-term growth by establishing a leadership position in digital solutions for homebuilders.”

Based in Middleton, Wis., Paradigm specializes in technology, software development, and consulting services that help manufacturers, retailers and homebuilders in the building products industry boost sales, reduce costs and become more efficient.

The tech company offers its customers a simplified process for configuring, estimating and manufacturing complex products with many options, such as windows and doors.

Acquiring Paradigm is expected to align with Builders FirstSource's broader vision to provide digital solutions that solve pain points at every step in the home building process.

Builders FirstSource said it plans to continue to invest in the core Paradigm Omni configuration technology, which also powers a newer product: Paradigm Omni for Homebuilders, a virtual design technology that improves efficiency.

"Becoming a part of Builders FirstSource will unlock new opportunities for our employees, introduce us to new customers and allow us to accelerate the adoption and deployment of our software to solve our customers’ complex business problems," said Nathan Herbst, Paradigm founder and CEO.  "I look forward to working with the Builders FirstSource team to enhance homebuilding through digital tools.”

The transaction is expected to close in 2021, subject to customary closing conditions and antitrust approvals. Upon closing, Paradigm will operate as an independent subsidiary of Builders FirstSource. Rothschild & Co is serving as financial advisor to Builders FirstSource, and Alston & Bird LLP is serving as its legal counsel.

Based in Dallas, Texas, Builders FirstSource operates in 40 states with approximately 550 locations and services customers in 48 of the top 50 metro markets.