Investment Thesis

Having worked with Rainier Partners since June 2023 to deliver a super regional flooring platform in the multi-family space, the Hartmann Family is very excited about the opportunity to create another building products installation and distribution focused platform.

When we look at the various opportunities in exteriors (roofing, windows, doors, siding, gutters, decking, etc.), with roofing experiencing significant M&A activity over the last few years, we see the windows and doors space as the next largest market with the greatest amount of fragmentation.

1. Wave of Replacement Activity

The highest volume period of homebuilding in the United States, 1998 to 2006, corresponds perfectly with the 25-30 year useful life of the average window. Therefore, 2023 to 2036 should see elevated levels of residential replacement activity, ignoring weather-related events that may drastically shorten the useful life and bring forward more opportunity.

2. Organic Growth Opportunity

Like most facility service businesses, there is a multi-channel opportunity across residential replacement, HOA / multi-family repair and community-wide replacement jobs, and new construction jobs for all building types (high end / custom single family, production / high volume single family builder, multi-family, & commercial).

Most window companies pursue just one channel (single family replacement typically), leaving substantial opportunity post-closing beyond the typical professionalization of a founder-owned business.

3. Segmenting the Market

When picking where or what kind of installation business we want to pursue, Seven East breaks targets down into three categories:

• Impact Windows (Southeastern U.S.)

• Residential Replacement (non-impact windows in all other geographies)

• High End New Construction (wealthy cities & resort towns)

4. Impact Windows: New Regulations Driving Replacement in the Southeast

Given the severity of recent storms, cities and counties are updating their building codes to require storm compliant building envelope products.

For example, Florida passed House Bill 293 in 2024 which requires all homeowners associations (HOAs) to establish and adopt specifications for hurricane protection measures, including impact-resistant windows and doors, permanent storm shutters, reinforced garage doors, and other envelope solutions.

The Florida Building Code already mandates that all new residential construction in designated high-risk areas, such as High-Velocity Hurricane Zones (HVHZs), must include impact-resistant windows or approved hurricane protection systems.

From a sales and installation perspective, impact window focused companies typically have average job sizes (revenue $) twice that of the standard non-impact residential replacement window company. Therefore, companies in the Southeastern U.S. have a quicker path to greater scale relative to rest-of-U.S. metro areas when controlling for factors like population.

5. Impact Windows: Market Growth

The hurricane and impact-resistant window market is experiencing exceptional growth at 7.2% CAGR, reaching $3.89 billion in 2024.

Revenue for Technoglass, owner of ES Windows, the leading impact window manufacturer for installation companies in South Florida, has grown from $430M revenue in 2019 to $890M revenue in 2024.

Between the constant storms, code changes, new construction activity, and population migration, window sales and installation companies have seen strong and continued growth in Florida post-Covid.

6. High End Segment

For investors who believe the windows and doors space is vulnerable to cyclicality in both remodeling spending and new construction activity, Seven East sees the pursuit of window companies focusing on luxury homes and custom homebuilders as the “flight to safety” in this category.

For reference, as the increased interest rates affected the average buyer, reduced home buying, and slowed or even reduced prices in the low end and middle segments of the housing market, luxury home value growth has outpaced the appreciation on typical homes since January 2024.

As of 2H 2024, the inventory of luxury homes was 46.9% below pre-pandemic norms. By comparison, total inventory across all U.S. homes was 32.6% below pre-pandemic averages.

All to say, the demand in the luxury segment in the U.S. is unrelenting. Window manufacturers and dealers that play to this segment in the right geographies stand to benefit.

7. Investment Criteria

• Flexible to owner situation

  • Can provide capital to fund acquisitions

  • Can make a majority investment for an owner to “take chips off the table” while they remain in a leadership position through the next phase of growth

  • Can facilitate an owner retirement via a 100% buyout and 6-12 month transition plan

• Revenue Mix: Open to 1) majority replacement businesses across all geographies and 2) majority new construction businesses targeting the high end single family segment.

To intermediaries and business owners: Please reach out to Brett Hartmann at brett.hartmann@seveneastcapital.com with any relevant opportunities.