Latest / The Buyout Show with Fexingo: Private Equity, Roll-Ups, and Business Acquisitions / How Private Equity Is Buying Up Commercial Door and Gate Companies
Transcript
- Lucas: If you've pulled into a loading dock behind a supermarket or driven into an underground parking garage, there's a good chance that door or gate was installed and maintained by a small family-owned company — and private equity has been buying them up at a surprising clip. Luna: Commercial doors and gates? That's a new one even for this show. What's the play? Lucas: It's actually a textbook private equity target. Think about it: every warehouse, factory, hospital, and parking structure needs overhead doors, rolling steel grilles, or automatic gates. They break, they need service, and they're safety-critical. That creates a recurring revenue stream — service contracts and emergency repairs — that's very predictable. Lucas: The market is incredibly fragmented. The largest player, a company called Nartech, has maybe five percent market share. The rest are mom and pop shops with two to twenty trucks. And those owners are getting older. Luna: So it's a classic roll-up thesis: consolidate a fragmented industry, standardize operations, and sell a bigger, more efficient platform to a larger buyer or take it public. Lucas: Exactly. And the numbers have gotten attractive. Five years ago, you could buy a regional door company for about four and a half times EBITDA. Today, with PE firms piling in, the average multiple is closer to six and a half times. But the acquirers aren't paying those multiples to hold forever — they're paying them because they believe they can lift margins from, say, ten percent to fifteen percent by consolidating back-office, cross-selling service contracts, and negotiating better supplier pricing. Luna: Who's doing the buying? Is it the big names or smaller funds? Lucas: Mostly mid-market firms — funds with two hundred million to a billion dollars. One that's been very active is Clearhaven Partners. They started a platform called United Door Solutions back in 2019 and have done about a dozen add-on acquisitions since. But the deal that caught my eye is National Doorworks, which was formed in early 2025 by merging five independent companies from Texas, Ohio, Florida, and the Carolinas. The combined entity does about eighty million in revenue. Luna: Eighty million from five family businesses — that's a meaningful roll-up. What did the sellers get? Lucas: A mix of cash and equity in the new platform. The typical structure: sellers take maybe sixty percent cash upfront and roll forty percent into the new company. That keeps them incentivized to stay and run their operations while the PE firm handles strategy and M&A. For an owner who's been running a fifteen-person shop for thirty years, it's a way to de-risk their net worth while still having upside. Luna: And presumably the PE firm brings better systems? I imagine a lot of these small companies are still using paper invoices and whiteboards. Lucas: That's exactly the margin story. One operator I spoke to — runs a door company in the Midwest — told me he was still sending out paper invoices and reconciling with a ledger. After the deal, the acquirer put in a cloud-based field service management system, centralized dispatching, and set up auto-pay for recurring maintenance. That alone shaved two points off overhead. Luna: So the buyers aren't just betting on multiple expansion — they're actually improving the businesses. But what about the risk? Commercial doors and gates are tied to construction and industrial activity. If the economy slows, doesn't that hurt? Lucas: It does, but less than you'd think. About sixty percent of revenue in these companies comes from repair and maintenance — not new installation. And those are nondiscretionary. If a loading dock door breaks, you fix it that day. So the cash flow is resilient. The installation side is cyclical, but the service book acts as a buffer. Lucas: The bigger risk, honestly, is labor. Finding technicians who can weld, troubleshoot electrical systems, and operate a service truck is getting harder. The average age of a commercial door technician is over fifty. There's no influx of young workers. That's actually a driver of consolidation — larger platforms can offer better training, benefits, and career paths that a ten-person shop can't. Luna: That aligns with what we've seen in other trades — arborists, plumbers, pool service. The labor shortage is pushing owners to sell. They can't find people, so they cash out. Lucas: Right. And the buyers are betting that they can attract and retain talent better at scale. If you're a twenty-five-year-old technician choosing between Bob's Door Service and a national platform with a 401 match and a clear promotion path, you pick the platform. So the consolidation becomes self-reinforcing. Luna: What about the exit for the PE firms themselves? Who do they sell to — a larger PE firm, a strategic buyer, or do they try an IPO? Lucas: Historically, the larger door companies like Nartech or Assa Abloy have been acquirers. But more recently, we're seeing other industrial distributors — think W.W. Grainger or Fastenal — look at these platforms as a way to add a service layer. And then there are infrastructure funds that like the stable cash flow. I'd expect most of the current PE investments to exit to a larger industrial services conglomerate within five to seven years. Luna: So the game is: buy small, build scale, improve margins, and sell to someone who values the recurring revenue. Lucas: Exactly. And it's happening faster than people realize. We've done episodes on veterinary clinics and dental offices — those are well-known. But commercial doors is flying under the radar. There are probably a hundred independent door companies doing between five and twenty million in revenue that are ripe for acquisition. Luna: And a lot of those owners are probably listening right now and wondering what their business is worth. What should they expect? Lucas: It depends on size and location. A well-run company with two million in EBITDA and a strong service base might fetch six to seven times that number. But if you're in a high-growth market like Texas or Florida, you could get closer to eight times. The key is to clean up your financials, get recurring service contracts in place, and maybe standardize your fleet. That can add a full turn of multiple. Luna: And if they don't want to sell? Can they compete with the roll-ups? Lucas: It's getting harder. The larger platforms can underbid on new installations because they get better pricing on materials. And they can offer national accounts — think a chain of auto parts stores that wants one vendor for all their locations. An independent can't do that. So the choice is often: sell now on your terms, or watch your margins shrink and sell later for less. Luna: That's a stark picture. But it also means there's a window of opportunity for sellers right now. Lucas: Absolutely. And we should say, if these episodes have helped you think about your own business or career, that's exactly why we make them. The show is entirely listener-supported — no ads, no sponsors. A number of you already chip in at buy me a coffee dot com slash fexingo, and that's what keeps us going. It's a small group, but it makes a big difference. Luna: Yeah, and it's genuinely appreciated. It lets us dig into niche topics like this without worrying about selling anything. So thank you to those who contribute. Lucas: Alright, back to doors. One more trend worth noting: automatic pedestrian doors — the ones that slide open at grocery stores and hospitals. That segment is even more fragmented than industrial doors. And with an aging population and ADA compliance driving retrofits, it's growing fast. Some platforms are starting to add that capability. Luna: So the roll-up thesis extends beyond just loading docks. Lucas: Exactly. And we're seeing cross-selling between divisions. A company that services your garage door might also service your pedestrian entrance and your loading dock. That's the holy grail — a single provider for all openings in a commercial building. Luna: It makes sense. If you're a facility manager, you don't want to call three different companies for different types of doors. Lucas: Right. And the PE firms are betting that the platform that offers full-service will win the biggest contracts. So expect more acquisitions in this space over the next couple of years. Luna: Thanks, Lucas. That was a fascinating look at a hidden corner of the private equity world. Lucas: You're welcome, Luna. If you're a door company owner with questions, feel free to reach out — we might do a follow-up on exit strategies.