Ace Hardware, an Oak Brook, Illinois-based retailer-owned hardware cooperative, has acquired Texas-based Legacy Plumbing to double-down on its position in residential repair services, said Bill Kiss, head of omni-channel and ecommerce businesses.  

The deal was completed around October and was announced at a recent company convention, he said. While he declined to reveal size of the asset, Kiss described Legacy Plumbing as a regional brand.  

According to the LinkedIn page of owner and president, Theron Young, Legacy Plumbing is a roughly 20-year-old owner-operated business that built an “outstanding reputation” for customer satisfaction. Headquartered in Little Elm, Texas, it serves cities in North Dallas, Collin and Denton counties, according to its website.

Ace may prefer to turn it into a franchise, Kiss noted.  

Last year, Mergermarket reported Ace Hardware saw success with its 2019 acquisition of fix-it franchiser Handyman Matters, which was rebranded to Ace Handyman Services. Today, it has more than 200 franchisees and is available in every state, he said, noting the business “grows very effectively” and “excels expectations.”   

Given its success, Kiss said the company has become “bullish” and acquisitive in the “do-it-for-me” space. It has a proactive outreach team that is charged with scouting local and regional targets, he said. 

When asked if Ace could execute another deal as early as 2023, he said: “Based on results with Ace Handyman, appetite is high.”  

Plumbing repairs is one area where Millennial and Gen Z homeowners prefer to hire a repairman rather than fix breaks themselves because of either lack of knowledge or lack of time, he said. 

Other areas for M&A interest include residential HVAC repair services and electrician services, he noted. Ace seeks high-quality and trusted brands that employ excellent technicians in performance and customer service, he stressed. 

Size is not a concern because Ace projects to receive 200m visits next year to its website, which is a powerful marketing tool, he said. The scale and “halo of Ace” will drive demand for any business it brings under its ownership, Kiss said.  

Kiss, a seven-year Ace executive, pointed to the company’s strong balance sheet, which he said makes it “easy to self-fund” its M&A strategy. Last month, Ace Hardware released a third-quarter earnings report that announced revenues of USD 2.2bn, a 10% increase over 3Q21, and net income of USD 100.6m, a 1.3% increase over 3Q21.    

Expanding in at-home services also helps sell product because franchisees are incentivized to stock their service trucks with Ace Hardware product, Kiss said.  

A sector banker said the hardware retailer’s attraction to the in-person home services industry is unexpected but sensible because profit margins are much higher. Also, fixing broken plumbing, HVAC and electric systems are essential 'must-buy' expenditures when they break, especially during extreme weather events, the banker said.  

The banker said strategic players in the space include Leonard Green & Partners-backed Wrench Group—which last month saw TSG Consumer Partners and Oak Hill Capital come in as minority stake investors. 

In November 2020, OMERS Private Equity acquired Kentucky-based TurnPoint Services, which has 17 brands in HVAC, plumbing and electrical services and employs roughly 720 technicians, according to a press release.   

Another large competitor is Michigan-based Heartland Home Services, which was acquired in 2020 by private equity firm The Jordan Company for undisclosed terms. Mergermarket reported at the time that the asset was marketed on USD 20m-USD 25m in LTM EBITDA. Cowen acted as financial advisor to PE-backed Heartland.  

The sector banker said Ace is entering a market that has been littered with private equity investment over the past few years. As dual-income households are increasingly the norm, he noted, a lack of time and know-how is driving market growth.   

Kiss—who has a background working for Sears Holdings, a former leader in residential appliance repairs—said Ace Hardware’s omnichannel performance puts it in competition with the likes of Wayfair.com and Amazon.com as well as Lowes [NYSE:LOW], Home Depot [NYSE:HD], True Value and Menard’s.  

Ace stands apart because it offers knowledgeable employees, small stores, at-home assembly, and free delivery, he said.