QXO founder envisions a $50 billion business
Brad Jacobs, the seasoned business leader who announced late last year that he’s about to bring his M&A playbook to the building products distribution industry, has described the growth potential for his start up, called QXO. He sees a path to building a $50 billion company.
QXO hasn’t launched yet. But Jacobs’ enthusiasm for the building products distribution industry remains high. And in a recent interview with the Knowledge Project podcast, Jacobs elaborated on his playbook.
He described his research:
“I spent the last year going around studying dozens of industries, looking at hundreds and hundreds of acquisition opportunities, mostly with Goldman Sachs, Morgan Stanley, and some other Sequoia and some friends figuring out, could I apply my playbook to this industry?”
He listed features of an industry that are ideal for his playbook:
“Is the industry big enough? Is the industry fragmented enough? Is there M&A a to do. Is bigger or better? That's not always the case. Are the economies of scale? Do you have a competitive advantage by being bigger?”
He pointed to the importance of technology.
Is there a way to apply technology? My companies have always been tech forward to the industry because the industry is a little sleepy on technology.
He came to a conclusion:
“I looked at many, many different industries and I settled on the one that checked every single box, which was building products distribution. The name of my company is going to be QXO. And M&A will be a big, big component of what we do.”
In the podcast, Jacobs shared his estimate that in Western Europe and North America, building products distribution is an $800 billion business. “That is where I want to plant my flag,” he said.
Based on an ability to capture roughly 6 percent of that giant figure through acquisitions and organic growth, Jacobs is setting his sights on a $50 billion company.
“There's many other industries that are nice, but I'm not going to be able to get $50 billion,” he said. "I want to get $50 billion. So this industry, there's a clear path of how I can do that.”
During the course of his investing career, Jacobs has raised $30 billion of debt and equity capital. He’s also led some 500 merger and acquisition transactions in multiple industries,
Jacobs is also the author of recently published How to Make a Few Billion Dollars.
