The Roofing Blueprint for Private Equity Success | Podcast Ep 224 | Toolbox for the Trades

Hello, contractors, and welcome to Toolbox for the Trades. My name is Jackie Aubel, and today I'm speaking with Kelly Masseris, the VP of Special Operations at LB Capital. Kelly is passionate about creating opportunities for people in the trades. Today she shares tips for contractors looking to partner with private equity and discusses how PE has set its sights on the roofing industry. I hope you enjoy our conversation as much as I did. Kelly Masseris, you are the VP of Special Operations at LB Capital in Bristol, Pennsylvania.

Today, you and I are going to.

Be talking about how to build it, to sell it, why roofing has become such a hot topic for private equity. I am so excited to chat with you today. Welcome to Toolbox for the Trades.

Thank you, Jackie.

So I have had your boss, Lance on the show, and I'm sure everyone remembers that episode because Lance is quite a character. So we're going to be kind of continuing that conversation, so to speak. But to kick us off, I want to learn a little bit about you. You've really had quite few a quite the career in the trades, especially since you joined Lance's group here. I want to know what's the best piece of advice you've ever received?

Go for it. Make mistakes and make those quickly. Right? Because then you're going to have more things that actually stick and work versus overthinking, over complicating and not making any decision at all. So just thinking fast, making decisions fast, and some of them are going to be failures, but at least you made them. And then the ones that weren't failures actually stuck and helped you, you know, grow. So that's my.

That's actually something. That's something I remember Lance telling me, or like he's saying it in a webinar or something. It's like, act quickly, make decisions fast. And that really resonated with me because I'm certainly someone who can just hem and haw and, like, kind of like sit on her hands, so to speak, and just like, I don't know, is.

That the best decision?

So I really respect that. So I already alluded to it a bit. You've got an interesting tale for how you became VP of Special Ops at LB Capital. So I want to know, how did you get into the trades and later find yourself in this role?

Sure. So a partner and I started an H Vac company from scratch in 2013, and then we exited the partnership in 2023. At that time, it had been 10 years, and we grew. We were budgeted to 5 million that year. When I Left mid year and grow to 18 mans. Great team, a team of 30 people. And then when it was time for to lead the partnership, I was friends with Tom Howard, told him that I was looking for a different opportunity, new venture. And he said, actually I'm flying out in two days to see my good friend Lance Bachman. He's looking for a GM for his H company, Dilling in Bristol, Pennsylvania. Why don't you meet me there? Maryland was only two hours away. So I drove down, met Lance and Lance is a very on the spot decision making because I had a couple other discussions later in that week with other people and he was like, I need a yes or no answer today. And then I was like oh. And I was like, well I'll give you a yes. And then maybe afterwards, you know, something out like after, you know, the following week came up, then I would deal with it then. Right. I'm the person that just jumps in and says yes. So I said okay, yes, I'll give you the yes answer today. And started the next week and turned down the other opportunities and we. I was the GM there for about close to a year and then he ended up selling it and then he pulled me over to all the operations of LB Capital, which overseas seven roofing companies.

So awesome. Awesome. So for 10 years you ran your own H Vac company, met up with Lance, he put you in the gm. He put you in the GM seat for an HC fact company that he was priming to sell. It got sold. And so now you're working with him to oversee all these roofing brands.

Correct. Dilling was the. It's the second Dilling that we had sold. The original one was in North Carolina, so this was the PA one. He exited that and then I came over to operations for his new ventures which are exclusively roofing.

Nice. Is dealing, was that a franchise name or were there multiple. There was just multiple locations.

Yeah. So the dealing was the dealing in North Carolina sold. It had a good name. We, we knew the structure. Right. And so we brought it to PA and grow it here and then exit it.

Awesome. I complete. I must have forgotten this when we did our pre interview that you also were in the owner operator seat for 10 years on your and your own. You said you grew it to 18 vans. That's incredible. I mean looking back on those 10 years, I mean it's impossible, I'm sure to distill this into one answer. But like looking back at those 10 years, what was like the biggest thing that you learned running and operating your Own brand.

I learned so much from every aspect too. We were one of the first year or two Service Titan users. We went from house copier for one year and went right to Service Titan. So that whole journey I was with service time which was great to grow and learn what service Titan as they grew and added more features and we maximize everything. So marketing pro phones pro that they had then and just learning marketing learning the I constantly engulfed myself in events and classes and things like that. So learning the PNLs and learning how to price right and set a structure your price book and everything like that that serves site and the CRM forced you to learn right to make sure that was set up right over those 10 years. And then people. It's all about the people. And I really didn't get into the understanding of private equity until I came over to LB Capital which we can do later in the podcast. So there were just. That was great because I focused more on operations there like the people and learning each department. And then when I came on here it was a lot more focused on okay, you have everything in place now. This is what PE is looking for to sell. And it was a much different vision from growing a brand and a long term game. Right. That was a long term game of building a name and for many years versus coming on here at LB Capital. And it's a very short term plan right. To grow it, scale it and exit private equity in a very short period of time.

Awesome. Really, really cool. I give you so much kudos for doing that. That is awesome. And I have to say you talking about how you've grown along with Service Titan. You were also on our other podcast Mastering Service Titan with Josh Lu talking about all of your expertise on Service Titan and we'll link that episode in the show notes for anyone who's interested in your technical know how. But we're gonna, we're gonna kind of go on the 10000 foot view here for this show. So actually I didn't know this. I completely embarrassing for me. I had. I. I did not know exactly how LB Capital worked and so I before we get any further, I want to talk about LB Capital and if you could elaborate on the business model and how it works for roofing companies looking to scale and grow. So assuming that no one has ever heard of it before or Lance pop them before which if you're in this world, I don't know how you've managed to avoid him, but I would love to hear the. The breakdown from your perspective.

Yeah. And a Lot. It's a lot of confusion, right? So LB Capital people are like, oh, it's a capital firm because has the name and it's not at all. So what the LB Capital model is is that we find the right partners, right? So we vet the partners. Are they a good person, a good family person, you know, make all the right decisions in life personally? Because that rolls over into your business life, right? If your personal life's a mess, the business isn't going to be great. So we vet the partners, and usually these partners are doing anywhere from 1.5 to 3 million in their current roofing business or whatever business it may be. But right now our focus is roofing. And once we vet them, we partner with them. So we do not give them any money. Like LV Capital doesn't fund them or anything like that. It's not a capital group in that sense. Lance takes over half ownership of the company, the partner keeps the other half. And with our SOPs, our leadership team like myself, our CEO Bill Roselle, our CFO, Jolyn Bachman, and our HR department, again, all the, our trainers here, we have all the leadership teams in place. We have all the structures and SOPs in place also. So what your P and L needs to look like, we know we have down to a T because we work with so many private equity companies with the multiple exits that Lance has had, what they're looking for, what they want, and what it takes to grow and scale. And our longest company we've ever kept is like 16 months. So we infuse that with our leadership team, our SOPs, our operations into these companies, over 1.5 million. We bring them the train their salespeople, retrain them for our way that we know it works, utilize all of our services. So Hatch, Angie networks, all the lead aggregators, again, every process across the board, grow them and scale them, and it works. The model works. Right? And then we sell them to private equity, usually within 16 months.

Wow. So LB Capital essentially has this formula for how to grow a successful business, how to prepare for an exit. So you guys essentially partner with these brands that have that as the end goal in mind. You and you get them there.

Yep. And within 16 months and they become millionaires.

I mean, it sounds, it. It sounds almost too good to be true, quite frankly. So I would love to.

It's hard work, right? Like, they have to put in the work they're they're doing. There's the sales leader. They become the sales leader of the organization in conjunction with us. So, like they're the feet on the ground because these roofing companies are in multiple states. So they're the, the sales leader in the organization. But that means that they're out doing ride alongs or they're out, they need to be out selling. So it's definitely uneasy. There's a lot of accountability, right. When you bring in a partner and we hold them to the vision and what they want because we know we're going to make them successful. But they're absolutely going to make that commitment and put the work towards it.

Got it. All right, I want to hear a little bit about the recent sale that you guys made, which was with Mun's Roofing and Sidane. So you acquired them in. Or acquired, Is that the right word?

Would you say acquired?

Partnered. Partnered in 2023 and it was recently sold to PE. So tell me a bit if you can get into details how you and the team accomplish that in such a short period of time. And you know, just to kind of give the folks listening an idea of what this commitment looks like.

So we months, we partnered with them and there was two partners, two roll ups with partners of their small companies combining about revenue of 1.5 million in 2023. That was mid 2023, like June. And we closed out that year roughly $3 million. So that closed out 20233 million. And we set a goal for $25 million in 2024. So that was a large goal and we fell short about $500,000 of that goal. So we.

Wow.

About 24 million 500 at the close of 2024. And at that point around October is when we got the LOI to sell Muns to private equity and we sell to Alloy. Yep, Roofing. And they are building out a whole platform based on the Muns model. So our sops, our CSR department, basically Muns is their largest, either largest or second largest company, I think it's neck and neck. And they want to build out their whole entire roofing platform as they acquire more roofing companies under the model that we did with muns.

Oh, so that's, that's very cool. So pe. So even the PE companies that are acquiring your partners, they are learning and building on the model that you guys have, Correct.

To build out multiple companies and then roll up to even a larger private equity scale.

Got it. And just for my purposes, loi, what does that stand for?

Letter of intent. So meaning like we had Lois probably around October of private equity companies that wanted to acquire Mun.

So okay, very, very cool. So, I mean, we've been talking about private equity on this podcast. It's kind of. We started this podcast in April 2020, which, you know, is when the pandemic, you know, blew everything up. And all of a sudden private equity got really interested in the trades. So we've been talking about private equity for a while on the show. I'm curious why private equity is so interested in the roofing industry right now. And what, in your opinion, are some best practices for roofing companies who are looking to partner with PE firms and have that pretty significant exit in, you know, a short amount of. A short amount of time?

Yeah, I mean, what we're seeing is private equity and what it was in H vac plumbing industry 10, 15 years ago. So when private equity first came into the trade space, their main focus was H VAC plumbing. And I think they went after that market and did a really good job of going out there market. And there's so many. They, you know, sucked up a lot of the companies and they realized that it's same across the board. Right? Like a great. What makes a great company is the same across the board, no matter what you're selling is H Vac plumbing, electrical or roofing. So I think they saw that. And now that I always say, like, roofing, the last three years has been what H Vac was, 10 to 15 years, they're really just coming into the roofing space. Even service site. Like when we first got on, they were just exclusively offering H Vac and plumbing services. Now, within the last year and a half, that service site moves just as lightning speed as we do here at LV Capital, you know, with our team, our help of our team, and Lance, he's almost the face of the service titan roofing aspect because he helped build out the good, better, best options. The, you know, our production department service site has come in here and sat down with our production team for a week and said, because we're getting risk put on new homes within 48 hours. So they're like, how are you making this happen? How have you gone 100% paperless? How have you not been able to use any other CR like resource about going around service site? Like, everything that we do is in service site. So they asked, like, how have you been able to make that happen? And again, we just built it out using an H Vac platform on ServiceTitan, then built it out to be roofing. And that's also how we came to acquire Titan Pro Technologies, who is a service Titan Titanium. They just got Titanium level partnership with Servicetitan.

Oh yeah, they're with the Service Titan certified providers.

Correct. So we own LV Capital, also owns Titan Pro Technologies. Oh, so cool.

I didn't know that. Yeah. So for anyone who doesn't know stcp, Service Titan certified providers, those are providers that have gone through a rigorous testing, rigorous testing devised by one of our early employees, Danielle Combs. Shout out, Danielle. And basically these are certified providers that say, hey, we know Service Titan in and out. And you can hire them to help you optimize your instance of Service Titan. So what I heard really in asking like, what are these best practices for roofing companies looking to partner with PE firms? It's basically follow the workflows that Service Titan says you should. Am I right?

Having the right CRM. So all the private equity companies that we work with, they don't look at any companies that aren't on a CRM and exclusively not on Service Titan because they don't want, like if it's not there and it's in someone's head that that is not sustainable, it's not scalable. So having it all in place, they know the program. They bring on coaches like Titan Pro that can do the same thing across all their tenants. And most of these private equities, that's the way they're going. They're not just buying one roofing company and nurturing it. They're rolling up multiples for the next roll up, the larger roll up. So if you have multiple companies on different CRMs, it just, it becomes a headache. And I even had a meeting with another PE firm last week who was looking to maybe get on, on utilize Titan Prototype Technologies services. And I told them the same thing. We have a model tenant, so every time we bring on a new partner, we just plop their information to that model tenant and it's already built out. And so that's where it allows us to be really scalable. We don't have time to waste. You know, we are growing these companies at lightning speed. So we have to have everything built out and ready to go. And it's a plug and play.

Yeah. So having all of these roofing companies on one CRM, in this case Service Titan enables you to quickly get everyone on the same page. You're quickly able to compare the businesses performances to be benchmarks that you've collected from the other businesses you've partnered with. And when they do roll up to private equity, private equity is able to just plug and play and go in there right away and see how this company is just take the reins.

Yep.

Wow. Well if we could get a little bit more granular than that. Besides you know, just people just saying if you're really looking to partner with PE then you should get on Service Titan. What are some of the things that Service Titan facilitates that make for a quote unquote good company that would that PE would be interested in buying or that LB Capital would be interested in partnering with?

So we're really big in branding. All of our brands are designed and created by Dan and Kick Charge. And with the way the partnership rolls up is that we come in and rebrand them to either be under like we have the fiber from public organization so that name or we rebrand them to be a name that's going to be well recognized in the in the area. And with that now we don't have time to build that name and brand in the neighborhood. So we rely a lot on these companies on lead aggregators again leads, networks, homebody next door, Yelp and with that integrating that into service site. And so all of our lead sources are integrated in the service site and on their bookings tab. Then we go to the dispatch pro like utilizing can when you're speed lead and you're running lean. Because when the private equity is looking at the P Ls and your EBITDA numbers right. Like we don't, we can't have a lot of overhead and that's one thing if you're trying to play the long term game but we're on a rolling 12 months that P L and that EBITDA like and you if you take into consideration the multipliers right. So when you're looking at a salary, it's not just the salary when you're looking at the EBITDA and affecting your overhead and you do a times a multiplier what you're going to get right. And that's truly what that person or that overhead person is cost is costing you. So we try to say lead to me and again we need to build these brands fast so we rely heavily. Only aggregators had an opportunity to build out in the area Dispatch pro. So again we don't really have a GM sitting there. We have the owner partner and half the time they're in ride alongs or you know being sales leaders. So not having a dispatcher on payroll hitting the overhead P L's production we're putting roofs on in 48 hours. So that has to be a efficient process. So as soon as a job is sold it gets alert to the Production team. Production for all of our companies is housed in here in Bristol. So we don't have production team members at each brand. It's all here in a collaborative effort and they book the job through the schedule. On Service Titan, drop ship everything so we have no materials stored in warehouse. We drop ship everything to the site, install it. We integrate all of our financing tools and service sites so that we can click the buttons complete and get the financing. We use reporting a lot through service site. So everything that we do there is not like a secondary software. We use to, you know, close a gap in service time. Every aspect of our company, from the CSR department to the sales department, we have good, better, best built out for our sales team to the production to our marketing department that utilizes those reports to make marketing decisions. And you know, the CSR department, I manage that to make decisions and make sure everyone's reaching their KPIs. Everything that we do is in there. No paper, no one off systems. It's all there.

Wow.

And that's a clean handover to private equity like our last exit. All we had to do is give them access, username, login to the QuickBooks and to Service Titan and all the data information they needed is all there.

Wow. So I just think I caught a little bit more about what your day to day involves. You managed that. You said that in your role, right. Your goal is to help these brands sell to private equity. So you're actually doing a lot of overseeing of these various departments at these different brands to make sure that they are growing in the ways that you want to see them grow, is that right?

A lot. So I do, in conjunction, and we're really mean here, oversee the CSRs because they're house here in Bristol. And then I say if you had to sum up my title, it'd be like a gap finder. Right. So I know what with the how long I've been here at LB Capital, I know what each department should be doing, what everything should look like and then just finding gaps and creating SOP to close those gaps if I do find one and make sure that everyone's following operationally everything they should, knowing what it takes to be successful and get to that exit.

So you mentioned earlier that there's also some personal qualities where you're looking for when it comes to looking for a good partner. I mean, I'm just hearing about all the things that you guys are doing. You move fast. That is probably like the understatement of the century here. So when LB Capital is Looking at roofing companies to partner with. I want to go to the red flags. But tell me, what are some green flags that you see in ownership? Like, what are some qualities that you're like, yeah, I think this would be a good partner.

If they're at that age. It's a perfect, like a good family person, someone that loves their spouse or their family. Because again, if you have chaos in your personal life, that's just going to roll over to your business life. So making sure that your personal life is aligned to where it should be. And we don't get down into the details, right, But I think it's just showing that you're not out partying because that's not going to let you be a focus. You make the right decisions, right? You care about your business. Your, your presentation is clean because that's how you're going to treat your business. And you, you're in a model employee for your, you know, your employees there. So I think they're just the green flags and I think you can gather that just by being around that person. So one of the requirements of becoming a partner is that you must come to one of our masterminds. And so that way we can see you bring your data to those masterminds. And it's open to anyone who wants to come to the mastermind as, as soon. Great event that we put on. But that shows your commitment, right, to your business and learning and things like that. So that's one of the commitments that we asked them to make and then we kind of spend two days with them and get a feel if they're the right partner.

So in your opinion, what is something that people often misunderstand about private equity.

That they only look or care about EBITDA and revenue say more about that. It's important factors definitely in the top three. But they look for the team, the people, because that EBITDA and that, that gross can go away really quickly if your team crumbles, right? Like you can go from being on top to zero if you don't have good team in place, a good leader. I think having your financials in order is, is really important. Like watching the due diligence stage of this. They were really looking into making sure our financials were in order, our, you know, our HR documents, everything was in order. Compliance, licenses. So it's not just about the EBITDA number. It's are you organized, do you have, is your accounting clean and, and the team? I think everyone thinks it's just about the money and it's not for them because they're looking at is it sustainable?

Well, you know, it goes back to if that person, you know, you could have great numbers, your EBITDA can be great. But if you're private equity and say the owner is the one that's really holding everything together, like making like is doing a bunch of stuff behind the scenes that they shouldn't be, they don't want to get into a situation where they purchase a company, the owner leaves, then the entire brand falls into chaos.

Yep. And that's where there's a transition period. So we have a lot of the partners and muns that stayed on for a year or two as like helping with sales and things like that to give them time to transition that over. But I think again if they come in, they meet the team and realize that you have a great team and leadership in place, then you can grow and scale that. And with the owner leaving, so what.

Advice would you give roofing companies looking to scale and grow, Especially those considering partnering with LB Capital or selling to a private equity firm. And I'll say this, besides getting on.

Service titan so service titan branding looking at your data. So like we have all of our P Ls by the 9th, 10th of the month because especially if you're a large organization and we have our marketing budgets set really high to, you know, to get to that growth really quickly. So bad decisions that aren't caught quickly can really take you under and affect the bottom line and cash flow. So looking at your reports, knowing having your P and L and knowing your numbers by the 9th or 10th of the month is extremely important. That's most of it is just knowing your numbers and making the right decisions.

Sounds good. Just want to pivot quickly kind of to wrap this conversation. You've had quite a few a career in the trades and as a woman in the industry I want to hear what advice you would give other women looking to break into the trades.

I always say, you know, put yourself out there. I follow as many Facebook pages as possible to learn like the server site, masterminds page or anything that I can follow and learn content. I read on like develop personal development self business development. I think just caring and being my passion. I attend all the events that I can possibly attend to learn a network. Right. Like I wouldn't be here if it wasn't for me going to an event and meeting Tom Howard and building that relationship and then meeting Lance and now all the other people that you know I've with being on this team have Met like yourself at Pantheon and the Toolbox for trade. Build up caring, being passionate about what you do. Right. Like, you have to love it. The trades are definitely stressful and not easy. So it has to be your passion. And then learning and self developing yourself and then engulfing yourself is my biggest takeaway. Just engulf yourself in everything care and it'll show and radiate through your work.

Amazing. Well, you definitely. I cannot wait to see where you're going to be in a couple years because I think you're going to be doing fantastic things. Kelly, is there anything we should have talked about as it pertains to roofing, as it pertains to private equity, the stuff you guys are doing at LB Capital, anything we should have talked about that we didn't get a chance to?

I'm like the biggest service site and advocate and again, I think that goes hand in hand with passion is when you have a CRM and a program that you've worked with so many years and you continue to watch it grow. And that's something I've been a part at. So I wrote out Dispatch Pro for all of our clients. The new contact Center Pro I'm currently doing. So all those things are so exciting. And that's what I'm saying is, you know, always say yes. Going back to that of like, what do I have advice for not only just females, but for males is saying yes to every opportunity, right? So sign up for every webinar that comes through your inbox if feasible. Taking on a project involving yourself, like, so you can be indispensable and know that's how it became in operations at LV Capital is I cared, so I involved myself. I learned and dove into things. Sometimes it's, it becomes like a crutch because everyone, every fire that comes is I literally had to put a sign in my door. Please don't interrupt because by now there would have been so many interruptions. But like to applaud has become like, I'm the firefighter, right? But then I enjoy that because I create a gap log and I said, okay, well how do I stop that person, that email or coming to my door again, obviously there's a gap in the sop. We either don't have an SOP for it or it's not been rolled out or being solid or something like that. So that's where I get fun of. Like, someone came to my door because as an organization we take accountability, right? Like I, we didn't coach them on that or tell them what to do so or direct them. So now I have an opportunity to create an SOP that helps other people. Because if one person has that question, I'm sure many others do. And now I have knowledge in every department of the LB Capital organization. So I think just diving in. Being committed has really helped.

Kelly, it has been so great chatting with you today. Thank you for taking time out of what I know is an incredibly busy day to share your story and your advice with us. This has been awesome. Thanks so much for being on Toolbox for the trades.

Thanks, Jackie. And if there's. Can I share a couple events that we have at OB Capital? So the Shop tour, like I said, that happens every month, the first Wednesday of every month. So that is a free event. Everyone can just go to the LD Capital website and there's a tour button that you click. And then you can come hang out with us for half a day and meet Lance, pick his brain. I will help you with anything. CSR operational canvassing team, our production team and our sales team. You get to sit in for our daily sales mojo and see what that looks like. So that's the first Wednesday every month free. Then we have quarterly masterminds. Those dates are on our website, always updated and that's a more immersed event. So it's two days and we ask that you bring your P Ls, your marketing structures and logins and we help you dive into your data and detect it of like, hey, this is how your P and L should be structured. This is. We bring in some marketing experts that look at this current PPC SEO set up. Hey, this is our recommendations or you're doing great. And then we have which lynch has purchased. Last year, it was our first one, was great. In December, Marco island was a roofing process conference. So we own that. And we had over 700 guests of that last year. So we think that's even going to be better this year. And that's first Wednesday and Thursday in December, same location in Marco Island.

JW awesome.

Awesome.

All right, Kelly, Well, I'm sure some people are already on those websites right now just figuring out how they can register for this. So thank you again for sharing your insight with us. You are a powerhouse. I cannot wait to see where you're at in a couple years. Truly.