After one timber alternative giant was bought, namely the DW3 acquisition of Eclectic Systems, this month has seen the announcement that the very first timber alternative company to set up in the UK fenestration sector, Evolution, is to be snapped up by the super-group Masco.
Why now?
Well, the industry is continuing it’s run of consolidation. Roughly as the recession kicked in, there was a realisation that the industry was way too big to serve the amount of business actually out there on the market. There were way too many fabricators to service an over-inflated number of installers. Since then, the number of installers out there has reduced dramatically, as has the number of fabricators.
But the fabricators haven’t been going out of business like the installers have. They have been bought. It’s just some deals are bigger than others. And the future purchase of Evolution by Masco is a pretty big deal.
The Evolution marque is a nice one to have in the bank. They were the first dedicated timber alternative company in the market and are arguably the reason we have a thriving timber alternative sector. There have been plenty of dedicated timber alternative since Evolution, and pretty much every other fabricator and sysco has a dedicated timber alternative product on the market now too. So to snap up a company of that calibre, at this time in the market, is a smart move.
Aggressive move
The purchasing of Evolution by Masco is an aggressive move on their part I believe. Although the details of the purchase are not known, and the amount of money involved hasn’t been revealed, it is a clear statement to the industry that Masco intend to position themselves positively, with star companies taking the attack to the market and eating up additional market share.
A move like this isn’t a new one. Many of the industry’s super-groups have been buying up star companies in recent years, in a push to cement their place and grow it further. This is going to be a subject I approach in another post on DGB this week. But what I can say is that a big battle between the groups is about to begin.
I have been told from Evolution that business will continue to operate as normal, and I believe them. I don’t believe this will be an acquisition where the buyer tweaks and picks at the company it buys. It wouldn’t make any sense to. The business model Evolution has used for the past 11 years has worked for them well so far. It’s been profitable. It’s been successful. It’s allowed them to produce one of the best products in the UK PVCu sector. To change it in any way would be a risk and may risk upsetting the network of installers Evolution has.
Who benefits the most?
Masco will tell you this is a big deal for them, and to be fair it is. But I think this is an even bigger deal for Evolution. Having a group like Masco will give them more financial clout than they ever had before, though they may not need to call upon it. They have always been a profitable business.
Masco could choose if it wanted to, to pump million into Evolution to supercharge the business and make it an even more powerful force. That is quite possible. It could help boost the Evolution R&D department and help spur on their already advanced range of products.
I foresee a titanic battle on the timber alternative front over the coming five years.
Masco has acquired a customer base and a turnover, Evolution will benefit from new buying power and R&D facilities to grow that customer base and loyalty.
But they will still need to remember what makes Evolution good: quality and above all customer service.
It can be easier to give great customer care in a smaller environment….. So yes, positive changes in the industry, but it musn’t be solely about numbers … a little soul will be good too.