That first consolidator about whom we originally reported was generalRoofing, headquartered in southern Florida. The dream of generalRoofing was to consolidate a number of large commercial roof-contracting firms and build them into one streamlined organization. A key piece of the strategy was to offer the consolidated firm in a public offering (IPO).
Unfortunately for the group, just as the deal was coming together, the IPO market collapsed and the dream of going public had to be set aside. Private financing was sought and gained, and the dream became a reality-at least the beginning of a dream.
The group continued to grow for a while, but began to suffer from a number of tough issues. Management changes begat more management changes, and by May of 2004, the firm was on the brink of total collapse.
Some day the story will be written of the things that happened leading up to this point, but this story is about the next chapter in the life of this most interesting roof-contracting firm.
Reorganizing, Retooling and RenewingFollowing acquisition by Republic Financial Corp. and Chapter 11 filing in May 2004, generalRoofing emerged from the bankruptcy filing in October of the same year. An astounding turn-around, but new owner Republic has displayed an uncommon ability in the area of taking sound, but troubled assets and turning them around.
Republic Financial Corp. tapped Bartley E. Roggensack Jr., former generalRoofing director and roofing-industry veteran, to lead the firm effective at the time of the acquisition and filing, naming him president and CEO. Roofing Contractor recently interviewed Roggensack for a view of the future of generalRoofing.
During the rather dark period between the Chapter 11 filing and the subsequent reorganization and emergence from bankruptcy, Roggensack and Republic worked to retool the firm, a job that included the tough work of analyzing the many individual operating units and deciding which ones would stay and which ones should go.
In the end, they terminated half of the operations that made up generalRoofing in 2003. Many of the original investors "lost everything," and many suppliers, employees and other stakeholders took a hit. Fortunately for the new management and ownership groups, most suppliers and many longtime employees have stayed behind their efforts.
Enter the New EraRoggensack and Republic are not just in this for the turnaround, but have taken up the leadership of generalRoofing for the long haul. Republic is, according to Roggensack, "An equity partner as well as a business partner," and has a culture as a "buy-and-hold company." For his part, Roggensack says, "I'm here for the foreseeable future". He sees consolidated contracting firms as a good business model, which when done right, can be very successful. Part of the restructuring of generalRoofing has included moving the company headquarters from southern Florida to Denver to be closer to Republic Financial Corp's headquarters in Aurora, Colo.
As of this writing, the structural ties between Republic and generalRoofing have not been institutionalized, but Roggensack expects to continue to rely on the considerable resources of Republic for the foreseeable future. Republic has seven or eight fulltime people "imbedded" within the generalRoofing corporate staff.
One key to the future success of the enterprise is both establishing and executing a business plan that will work. Roggensack is convinced that they have a plan that will allow generalRoofing to succeed. That plan began with the restructuring of the people and assets of the firm.
Roggensack tells us that the new generalRoofing will be "about half the size of the company we were a year ago." In 2003 the firm reported sales in excess of $300 million, but projects sales in the $150-160 million range for 2005. In deciding which operating units to terminate, the new management team looked at three basic criteria: people, infrastructure and market environment.
PeoplegeneralRoofing had become centralized in many of its operating functions. Roggensack believes there are certain business activities that may be centralized for savings and efficiencies, and some that should be run by the local operating unit leadership. The new business plan requires strong local leadership to run the local roof-contracting and roofing service units.
Following several years of management and operational challenges, generalRoofing did not have leaders on the ground in every location that were motivated or otherwise capable of working in the new scheme. Some of the leaders with the firm now are the original owners of the roofing companies that consolidated into generalRoofing. Some folks who parted with the firm have returned over the course of the past year.
Roggensack says, "The generalRoofing people that are here today are very resilient, very dedicated, very professional people (and) want to make a contribution to the roofing industry."
InfrastructureWith strong local management, a sound infrastructure had to be in place and functioning to move forward with the new business plan. The requirements include organization, skilled workers, workable facilities and equipment, and a solid history and reputation to name a few.
Some of the things Roggensack believes cannot be centralized include estimating, job execution and collections. These things all require a system that fits with the local culture and management. Roggensack says a headquarters or third-party approach to collections simply did not work for generalRoofing.
Market EnvironmentgeneralRoofing had operations in markets that were either not capable of supporting a growing concern, or that simply would not support the new business model for profitability. Roggensack tells us the new, smaller, leaner generalRoofing will no longer simply seek work by way of the public bid process. Their intention is to focus on the service and maintenance aspects of their business, focus on the needs of their clients, and go after negotiated work.
Moving ForwardRoggensack describes the firm's clientele, the building owner of today as, being much more sophisticated, becoming more knowledgeable and wanting more accountability. As such, he feels that generalRoofing has a competitive offering with a range of products and services, strong local management, a sound back office with the backing of Republic Financial Corp., and a smaller but nonetheless coast-to-coast presence to handle national accounts.
The primary mission will be to continue refocusing the efforts of the firm. Roggensack says that 2005 will be a year of "stabilizing the company." He expects to accomplish that by working the strategic plan, looking more at private-sector work, and focusing on profitability as opposed to top-line results. Once these things are accomplished, strategic acquisitions may once again become part of the plan.
Will it work this go-around? The new plan would seem to spread the responsibility for that among all of the stakeholders in this venture, from Roggensack to Republic Financial to the presidents and leaders of the individual operating units to the troops on the roof installing the finished product. Like all ventures, time alone will tell.