Los Angeles, CA – Corridor Capital, LLC, through its affiliated funds Corridor Capital II, L.P. and Corridor Capital II Parallel, L.P. (collectively, “Corridor”), has sold the businesses underlying Consolidated Flooring, LLC, the holding company for its portfolio companies SCI Floor Covering, Inc. and MC Flooring, LLC (collectively “SCI Flooring” or the “Company”), a leading Midwest provider of floor covering value-added distribution and installation solutions, to Rainier Partners, a lower middle-market private equity firm.
In November 2013, Corridor acquired a controlling interest in Michigan-headquartered SCI Floor Covering, Inc. with the thesis of building a leading value-added distributor and installer of floor covering in the Midwest for the multifamily, commercial and homebuilder markets. Corridor applied its transformational investment methodology and collaborated with Company management, including CEO Dave Elberson and COO / CFO Tom Shea, to build the necessary scalable infrastructure to pursue both organic and acquisition-based growth. With Corridor’s support, SCI Flooring ultimately expanded beyond Southeast Michigan to additional markets and states across the Midwest and achieved a leading market share position for its core services in each of its major markets (Southern Michigan and the greater Kansas City area). Over Corridor’s hold period, the Company generated significant annual revenue growth and increased pro forma adjusted EBITDA by nearly 3x.
“It has been a privilege to collaborate with Dave, Tom and the rest of the SCI Flooring leadership team to help evolve an already highly competitive business within Southern Michigan into one of the Midwest regional leaders in multifamily and commercial flooring,” noted Corridor CEO Craig Enenstein. “Corridor’s purpose as a firm is to ally with strong management teams of lower middle market business services companies to help them achieve their full potential.”
Phase 1 – Infrastructure Implementation
In collaboration with Dave and Tom, Corridor focused on enhancing human capital, processes and systems.
Human Capital: During the investment, Corridor supported Dave Elberson’s elevation to CEO and also hired COO / CFO Tom Shea, a finance and operations executive who previously held roles at a leading North American staffing agency and PricewaterhouseCoopers. Additionally, Corridor helped meaningfully grow the sales organization and reposition key team members into senior roles.
Processes and Systems: With Corridor’s support, Mr. Shea designed and implemented a modern finance function, including budgeting, dashboard reporting and financial controls, which enabled the successful migration to a traditional board meeting cadence, lender management capabilities and annual audits. In core operations, management and Corridor worked together to perform client and product margin analysis and developed strategies to ensure competitive and appropriate pricing.
Phase 2 – Organic and Acquisition-Based Growth
Acquisition-Based Growth: Corridor facilitated a strategic assessment of the flooring installation market, with particular focus on geographic and end-market expansion and developed a prioritized acquisition plan. On behalf of SCI Flooring, and with management’s support, Corridor completed two add-on acquisitions, resulting in the entry into two new geographies, economies of scale and purchasing synergies, expanded product and service offerings, increased market share in certain end markets and valuable human capital additions. The Corridor Operations & Advisory Group worked closely with management to integrate the acquired businesses, which included the development of a centralized shared resources group.
Organic Growth: The Company expanded its product and service offerings as well as diversified both its supplier and installer networks. The Company hired key sales team members and leveraged its existing customer relationships to expand market share across the Company’s core geographies.
Corridor believes that implementing its two-phase model assisted in transforming the Company into a scalable enterprise, well-positioned for sustainable long-term growth.
Croft & Bender served as the Company’s financial advisor and Morgan Lewis & Bockius provided legal services for the transaction. Kroll supported the process with accounting services. Lockton Companies provided insurance services.