As an illustration of the extent to which Kodiak Building Partners embraces decentralization as a bedrock principal, Swinney recalled a conversation with investor partners (from Court Square Capital Partners) in 2017. The investors wanted to talk about the popular topic of synergies. They wanted to know how Kodiak promoted the idea that a company newly acquired by Kodiak will benefit by being part of the larger group.
Swinney’s response surprised them.
“We said, ‘You know, we don’t really get too may synergies when we close the deal,’” Swinney recalls. “And they were like, “What?’”
The logic is simple, Swinney explained. If something works, don’t change it. After an acquisition, the decision-making remains in the hands of the local operators who know their markets better than anyone.
“We partner with great companies,” Swinney said. “Yes, of course, we do work on how to get better. But we're not going in trying to change things right away.”
In many ways, the model is quite different from the heavily-centralized, overly-staffed approach used by ProBuild Holdings, the $5 billion giant of the industry heading into the great recession. (It was later acquired by Builders FirstSource in 2015.)
Hylbert sums up Kodiak’s model this way: “The whole thesis that we had was that we wanted to go out and buy good companies and provide a platform where the people in the company could concentrate on running and growing the business,” Hylbert said. “We provide the financing and the insurance and the benefits and all that stuff. And we'd operate on a very decentralized basis from a customer and supplier standpoint. And that's exactly what was done.”
Kodiak Building Partners, like the rest of the LBM industry, is bracing for a residential construction slowdown in 2023. But there’s no panic. Just the opposite.
With a diversified portfolio that runs across lumber and building materials, construction supply, gypsum, doors/millwork and interiors, Kodiak believes it is built to withstand temporary declines in any one area. And being so built, it believes it can take a long-term view, mitigating risks and maximizing growth across the company.