Redwood Services - Experts & Thought Leaders

Redwood Services (“Redwood”), a home services firm focused on investing in leading residential HVAC, plumbing and electrical services companies in growing U.S. markets, has announced it has invested in Best Care Home Services (“Best Care”). Best Care was founded in 2009 by Brian Reed. The business has nearly 90 full-time employees serving the metro areas of both Memphis, TN, and Huntsville, AL, with a customer base that has grown to over 40,000 home owners. Investment in Best Care Home Services “Best Care has quickly established a powerful presence in the Memphis and Huntsville markets, with a strong, experienced team that supports the company's rapidly expanding customer base,” said Richard Lewis, the Chief Executive Officer (CEO) of Redwood Services. Richard Lewis adds, “Demonstrating an uncompromising commitment to finding top talent and providing superior service, Brian and his team have shown themselves to be fully aligned with the high standards that distinguish all Redwood Partners. We are pleased to welcome Best Care to the Redwood family and look forward to supporting the company's continued high-growth trajectory.” Redwood to offer operational, strategic and financial support Brian Reed will retain a significant minority ownership stake as part of the investment Brian Reed will retain a significant minority ownership stake as part of the investment. Redwood will offer operational, strategic and financial support to enhance the company’s growth, while the Best Care team will continue to operate and manage the business under the Best Care banner and name. “From my earliest conversations with the Redwood team, it was clear that they recognized and appreciated the business values we’ve established at Best Care,” said Brian Reed, the Founder and Chief Executive Officer (CEO) of Best Care. Redwood Services and Best Care Home Services partnership Brian Reed adds, “Our drive to support and coach team members has been a significant factor in our success. With Redwood, we have a Partner that will put our people first and invest to accelerate our growth as we meet the high expectations of our colleagues and communities.” Best Care is Redwood’s ninth platform investment, following investments in Kent, OH-based Apollo, Jackson, MS-based Environment Masters, Phoenix-based Plumbing Medic, Indianapolis-based Service Plus, Cincinnati-based Arlinghaus, Fresno-based Allbritten, D.C.-based John C. Flood, and Tucson-based Rite Way.

Redwood Services, a home services firm focused on investing in residential HVAC, plumbing, and electrical services companies in growing U.S. markets announces it has invested in Apollo Heating, Cooling, and Plumbing (Apollo). Apollo was founded in 2004 to serve homeowners in Northeast Ohio. The business has more than 60 employees and 4,500 active customers. Apollo provides heating and cooling, as well as plumbing, sewer, and drain services to residents across Greater Akron. Strong revenue growth “Apollo has demonstrated strong revenue growth and they are just getting started,” said Richard Lewis, CEO of Redwood Services. “Across the Redwood family, we have seen Partners’ success built on consistently delivering high-quality, wholistic solutions to the residents in their communities. Nick and his team personify that commitment, which gives us tremendous confidence that they are a fit for the Redwood family and we are a fit for them.” As part of the investment, Nicholas Leisinger will retain a significant minority ownership stake As part of the investment, Nicholas Leisinger will retain a significant minority ownership stake. The Apollo team will continue to operate and manage the business under the Apollo banner and name, while Redwood offers operational, strategic, and financial support to enhance the company’s growth. People-Centric approach “At Apollo, we feel partnering with Redwood will only expand our growth and people-centric approach to business. They have already begun assisting us in operational areas across the business as well as connecting us with other Partners within the Redwood family,” said Nicholas Leisinger, President of Apollo. He adds, “In a field that is consistently innovating with technologies to improve service offerings, Redwood’s deep expertise and network can connect us to vendors who have the best products to evolve and grow our business.” Apollo is Redwood’s eighth platform investment, following investments in Mississippi-based Environment Masters, Arizona-based Plumbing Medic, Indianapolis-based Service Plus, Cincinnati-based Arlinghaus, Fresno-based Allbritten, D.C.-based John C. Flood, and Tucson-based Rite Way.

Redwood Services (Redwood), a renowned home services firm that is focused on investing in major residential HVAC, plumbing and electrical services companies, in growing U.S. markets, has announced it has invested in Arlinghaus Plumbing, Heating and Air Conditioning (Arlinghaus). Based in the Greater Cincinnati area, Arlinghaus has been offering plumbing, heating and air conditioning services to home owners throughout much of the US States of Kentucky, Indiana and Ohio, since 2008. Arlinghaus Plumbing, Heating and Air Conditioning In that time, the company swiftly grew and developed a reputation as one of the most trusted HVAC companies in the Cincinnati tri-state area, complete with a state-of-the-art training university and distinctive bright pink branding, which proudly amplified by over 100 employees. “With their passion for providing exceptional service and giving back to the community, the Arlinghaus team has established a tremendous foundation from which the company is poised to grow in the years to come,” said Richard Lewis, the Chief Executive Officer (CEO) of Redwood Services. Innovative training university Their innovative training university has deservedly drawn national attention in the HVAC community" Richard Lewis adds, “Their innovative training university has deservedly drawn national attention in the HVAC community and contributed to their impressive track record of growth. We are thrilled to join the great team they have built and work with them to make it even stronger.” Brian and Heather Arlinghaus, Co-Founders of Arlinghaus, will retain a significant minority ownership stake. The Arlinghaus team, led by Brian as President and Heather as General Manager, will continue to operate and manage the business, under the Arlinghaus banner and name, while Redwood Services offers operational, strategic and financial support to enhance the company’s growth in the Cincinnati market. Redwood Services – Arlinghaus partnership “Since the day we started Arlinghaus, over 13 years ago, we have remained dedicated to our core mission, achieving and exceeding the expectations of our customers by working together as a cohesive and passionate team,” said Brian Arlinghaus, President of Arlinghaus, adding “Redwood Services shares that focus on teamwork and community.” “While Brian and I never planned to take on a partner for our company, Redwood understood what made us successful while offering a level of operational expertise that promises to supercharge our growth,” said Heather Arlinghaus, General Manager of Arlinghaus. National network of premier home services companies Arlinghaus marks Redwood’s fourth platform investment overall and second in as many months, following the company’s investments in Tucson-based Rite Way Heating, Cooling and Plumbing in December 2020, Washington D.C.-based John C. Flood of Virginia in June 2021 and Fresno-based Allbritten Plumbing, Heating and Air Conditioning Services in January 2022. With the investment in Arlinghaus, Redwood expands its reach from the two coasts to the Midwest US, as it seeks to build out a national network of premier home services companies.

The HVAC market is forecasted to grow at a projected compound annual growth rate (CAGR) of 3.9%, with a prediction to reach $370 billion by 2030. But in reality, the HVAC and plumbing industry is changing rapidly, with operators facing new challenges like never before. Whether it’s rising costs, the uncertain economy, increasing competition, or the workforce shortage, there’s no doubt the HVAC and plumbing market is evolving. So how do you adapt? That’s the key question. My take is that we can’t predict the future, but we can adjust based on the facts on the field. That’s why now is the time for industry operators to focus on strategies that elevate growth, relationships, and longevity. Here are three ways to tackle today’s market. 1. Diversify Service Offerings With the rising costs of customer acquisition and market competitiveness, it is increasingly challenging to build a successful, resilient trade business by just offering one service — especially if it’s a seasonal specialty. While one-service shops were the norm historically, things have changed in the market. The contractor’s relationship with the customer has never been more valuable, and offering multiple trades allows operators to keep relationships within the four walls of the company – without referring valuable leads (or the potential to lose a customer entirely) to the competition. While one-service shops were the norm historically, things have changed in the market By adding more services to your HVAC and plumbing line-up, you become the one-stop, go-to source for essential home services in your market. For the long-term sustainability of the business, it is crucial to ultimately offer the essential three services: electrical, plumbing/sewer, and HVAC. Additionally, when you provide a variety of services your business will experience less seasonal or cyclical highs & lows because it’s well-rounded, diverse, and, ultimately, healthy. 2. Build Scale through Investment It’s a fact: The home services market is highly fragmented, with over 100,000 contracting businesses active in the United States. It also continues to churn out profits — making it a quality investment for home services investors and private equity sponsors. The fragmented market dynamic is an ideal opportunity for consolidation – and there is more investment capital flowing into the market than ever before. Owners with ambitions to grow can be aggressive with tuck-in acquisitions to offer differentiated services Nationally, scaled Platforms backed by investors or large franchisors service ~20% of the market in a metro area. The benefits of scale are significant: substantial purchasing power (especially on equipment), robust digital/traditional marketing capabilities, programmatic recruiting/training functions, breadth of service offerings, and robust balance sheet to fund growth and investment – just to name a few. However, not every investor is the same. Many employ business practices inconsistent with the culture of founder/owner-backed businesses, which smart entrepreneurs/operators can use to their advantage. Owners with ambitions to grow can be aggressive with tuck-in acquisitions to offer differentiated services and build breadth/new skills in their businesses. Alternatively, businesses struggling to make it on their own or with owners approaching retirement, can partner with larger service providers so they can keep practicing their trade without having to run the day-to-day business – just be careful with selecting the right investor to protect your people and legacy. 3. React in Real Time One thing the HVAC and plumbing industry has proven over the last few years is its resilience – especially for the best operators. No matter what the economic climate is, homeowners still need to protect and stay comfortable in their most valuable asset. That should provide a sense of job security to HVAC and plumbing professionals — but also motivate you to go the extra mile to attract and retain business. Just because the HVAC and plumbing industry has shown signs of being recession-resistant (for now) does not mean it can’t be impacted by the economy. That’s why it’s crucial to manage the business daily – especially pricing and the components of gross margin. The best operators review cost inputs with their teams weekly and adjust mid-month, which ultimately helps the business maintain its health and profitability. As we head into the back half of 2024, it will be interesting to see how the rest of the year plays out for the industry, and I continue to be optimistic about a bounce back after a tough 2023. We will have to wait and see-but with the strategies above, businesses can position for success no matter what happens in the future.