QXO: A building products distribution consolidator is born
A new player has entered the industry intending to become a market leader in building products distribution.
Entrepreneur and investor Brad Jacobs announced the founding of QXO, Inc.
“QXO’s strategy is to create a tech-forward leader in the building products distribution industry through accretive M&A and organic growth, including greenfield openings, with the goal of generating outsized stockholder value,” Jacobs said.
Over the course of his career, Jacobs has raised $30 billion of debt and equity capital, including three IPOs, and led approximately 500 merger and acquisition transactions across multiple industries. Jacobs is also the founder of United Rentals and United Waste Systems.
Jacobs will become chairman and CEO of QXO upon the closing of a $1 billion cash investment into SilverSun Technologies, Inc. After spinning off the existing SilverSun business, the remaining company, QXO, will be a standalone platform for “significant acquisitions,” according to Jabobs.
QXO intends to be an industry consolidator while pushing the use of technology, including AI and B2B e-commerce.
The company said the building products distribution business is highly fragmented and noted that there are nearly 7,000 distributors in North America and 13,000 in Europe. QXO said its data shows that the industry has generated compound annual revenue growth of 7% over the last five years.
QXO also said the percentage of industry revenue derived from e-commerce is currently only mid-single digits, and this share is expected to triple by 2030.
The new company plans to expand the use of tech including price optimization, demand forecasting, warehouse automation and robotics, automated inventory management, route optimization for delivery fleets, supply chain visibility, and end-to-end digital customer connectivity.
Regarding how the company is being built, Jacobs Private Equity (JPE) and the minority co-investors have invested $1 billion in cash into SilverSun. The proposed investment is comprised of $900 million by JPE and $100 million by co-investors, including Sequoia Heritage.
JPE will become SilverSun’s majority stockholder with Jacobs becoming its chairman and CEO. SilverSun will be renamed QXO and become a standalone platform for Jacobs’ new venture following the spin-off of the existing business to SilverSun stockholders.
"We expect to achieve a revenue run-rate of at least $1 billion by the end of year one, at least $5 billion within three years, and tens of billions of dollars over the next decade,” Jacobs said. “QXO’s scale should elevate the customer experience, increase sales force effectiveness, and enable margin expansion.”
QXO has not revealed where its boots will land when it comes to an initial industry acquisition and what type of materials distributor it purchases.
