How Private Equity's Vision For A Roofing Conglomerate Went Bust

Investment firms are buying and bundling contractors, leaving some workers and customers worse off.

At 9 a.m. on a Tuesday in late October, as Nathan Hendricks drove to a cabinet installation job in Elk Grove, Calif., he got a call from his office. His employer, Reborn Cabinets, had shut down. All its workers were supposed to return their company vehicles and iPads by the following day.

He was not entirely surprised. The company had changed a lot since Audax Group, a private equity firm, bought it in 2022 and added it to a collection of home improvement brands called Renovo Home Partners. It started using lower-grade materials, forced employees to buy their own protective gear and pushed them into subcontracting roles, Mr. Hendricks said.

“When I got word of this, my heart did sink,” Mr. Hendricks said. “My main concern was, what am I going to do now? Am I still going to get paid and all that?” He didn’t get his last paycheck, or reimbursement for the $400 he spent on gas driving to job sites over the previous two weeks. About 1,500 employees were abruptly terminated, along with their health insurance. Customers were left with unfinished roofs, basements and bathrooms. Renovo’s websites, email addresses and social media went dark. Nobody answered the phone.

“I thought Reborn Cabinets was going to be a family company for years to come, but they did kind of sell out,” Mr. Hendricks said. He found work with a small painting company this week, and said he would avoid private equity-owned companies in the future.

Renovo’s sudden closure shows how private equity ownership can go wrong for an industry that has been flooded with funds seeking to roll up small businesses with a few million dollars a year in revenue and good reputations in their local markets.

The thesis is simple: After gaining efficiencies of scale, acquirers can sell the integrated bundle, or platform, to someone else, doubling or tripling their money. But that bet hasn’t paid off in recent years. Many home-improvement companies have stagnated as interest rates have risen and the housing market has slowed.

“There’s been a lot of consolidation activity, lots of platforms launched, mostly by private equity funds, but very few have gotten to that exit,” said Randy Korach, who started a roofing company, then became chief executive of a much larger one when a private equity company bought it and several others in 2021.

The newly named Roofing Corporation of America was sold in 2023 to a public company with a range of property services. “There’s probably going to be a lot of successful platforms built, but probably others that maybe didn’t mitigate against market downturn risk,” Mr. Korach said.

Rolled Up

Renovo took shape in 2022 when the Audax Group, a Boston-based private equity firm, started buying up family-owned remodeling companies that were leaders in their regions.

Minnesota Rusco had been around for 70 years, and was known for its catchy television jingle. Dreamstyle Remodeling was founded in 1989 in Albuquerque by a husband-and-wife team who amassed a 125,000-person client list. Newpro, which a family started in 1945 as a window replacement business, grew into one of the largest remodeling firms in the Northeast.

They were among seven purchased with about $150 million from some of the largest private lenders in America: BlackRock, Apollo and Oaktree Capital Management. By 2022, Renovo ranked eighth on Qualified Remodeler’s list of the largest home improvement companies, with 2,700 employees and $653 million in annual revenue.

Some executives stayed on to help run their companies, but knitting them together proved difficult. Management was centralized in a “top-heavy” office of people who didn’t all have experience in home improvement, said Melanie Marfoglio, who was vice president of Reborn Cabinets when it was acquired and stayed with the company until July.

“The execution was all wrong, because they didn’t take into consideration individual cultures,” Ms. Marfoglio said. “These are different customers, too, so a one-size-fits-all doesn’t really work.” Cost cutting drove away top performers, said Douglas Elam, a project manager for Dreamstyle from 2021 to 2023. He left for another private-equity-owned remodeling company that closed in 2024, then rejoined Dreamstyle this year.

“The biggest expenditure is labor, so they start renegotiating with the installers and say, ‘The 10 to 12 percent you were making is now going to be 8,’” Mr. Elam said. “The A team walks out the door, and we’re left with the B’s and the C’s. So quality went down, and complaints went up.”

At the same time, higher prices for labor and materials put pressure on costs. Higher interest rates dissuaded homeowners from moving, which weighed on the kind of remodeling activity that happens when houses change hands.

“Renovo looked really good on the surface,” said Aaron Toomey, a managing director at Anchor Peabody, an investment advisory firm for the building industry. “Everyone who watched this industry or thought about it carefully knew that the post-Covid boom was pulling a lot of demand forward.”

Although Dreamstyle was the worst performer, the other companies started faltering too, as aggressive expansion plans didn’t pan out and the company went through several layoffs. Qualified Remodeler reported the company’s revenues dropped to $449 million in 2024. The lenders acknowledged that Renovo wasn’t making debt payments as scheduled in late 2024, and in April 2025, BlackRock essentially foreclosed on Audax, wiping out its equity interest.

BlackRock tried to restructure Renovo with new executives and more investment in integrating internal systems, and said its performance had improved. In the fall, BlackRock put the company up for sale.

But there were no offers. On the evening of Oct. 27, Renovo executives were told that the company was out of money, and that BlackRock wouldn’t put any more in. The next morning, they told their direct reports, who broke the news to everyone else, including Mr. Hendricks in 

Northern California.

Telling workers at the company’s call centers was particularly difficult because many worked paycheck to paycheck, said Doug Herring, the former vice president for inside sales. He had been asked to set goals for the next year, had just signed a contract with a new vendor and had been approved to hire new employees.

“This really came out of nowhere,” Mr. Herring said. “I’ve been doing this 30-plus years, and I’ve never seen anything like this.”

A few days later, Renovo filed for bankruptcy, seeking to dissolve the business rather than reorganize it. Its petition listed less than $50,000 in assets and more than $100 million in liabilities, with hundreds of creditors. According to screenshots viewed by The New York Times, Renovo processed a last round of payroll for headquarters employees, but not for workers at its subsidiaries.

“BlackRock committed substantial resources to support Renovo’s turnaround in an effort to manage investments we make on behalf of our clients,” said Patrick Scanlan, a spokesman for the company.

“Despite the efforts by BlackRock and other investors to stabilize the company, significant performance and cash flow challenges persisted, and a sale process found no buyers. This ultimately led the Renovo board to determine that liquidation was the only viable option for the company.”

‘

An All-In, Full-Frontal Attack’

Private equity is a copycat industry. In the mid-2010s, firms bundled up HVAC, pest control and plumbing contractors, which promised recurring revenue and considerable economies of scale. Many contractors, like Renovo, have been consolidated into platforms with different services that can be promoted to customers once they’ve tried one.

Roofers are the latest fashion. Although homeowners don’t need a new roof very often, it’s also not something they can defer, which means it’s less subject to the ups and downs of the housing market. Demand is increasing as damaging storms become more frequent and insurance requirements tighten up.

After a five-year acquisition spree, private equity groups own most of the largest roofing companies in the country, according to Roofing Contractor magazine’s top 100 list. Josh Sparks took private equity investment for his roofing company in 2021, and has since accumulated 25 brands under the umbrella Infinity Home Services.

“It has been an all-in, full-frontal attack,” Mr. Sparks said on a roofing industry podcast. “Anybody who owns a roofing company or, heck, anyone who has a company that starts with the letter R, they’re being solicited by private equity firms.”

Mr. Sparks said there could be trade-offs. “They will deploy the private equity 101 model, which is what everybody’s afraid of and should be afraid of,” he said. “My question is, what value does that create for the customer?” Sean Shapiro sold his roofing company to a private equity firm in 2021 and now serves as a broker for other roofing company owners looking to sell. Even with economic pressure mounting on home improvement companies, Mr. Shapiro said, he doesn’t see private equity’s appetite abating.

“They’re using other people’s money for the most part, so they’re still going to go deploy it even if they are not as bullish on that industry,” Mr. Shapiro said.

Erie Home was founded in 1982 in Toledo, Ohio, and acquired by Gridiron Capital in 2021. Soon after, Erie pushed out some of its long-tenured executives. Bad reviews describinghigh-pressure sales tacticspiled up. Harrison Dilthey, who worked as a salesperson in Erie’s Boston office in 2023, described the company’s tactics as predatory. Midway through his time there, Erie reduced the share of sales it would pay in commissions. That prompted representatives to open with an offer significantly higher than the true cost, Mr. Dilthey said.

“The pressure of selling and the culture there was really toxic,” he said. Churn was high. Although he made $70,000 in five months and was among the company’s top performers, he said, Mr. Dilthey left after five months once he had paid off his student loans.

In September, Gridiron sold Erie to another of its portfolio companies, Leaf Home, the second-largest remodeling firm in the country, with $1.8 billion in sales. The company took on $4 billion in equity investment and debt from Apollo and Ares Management to finance the transaction.

“The support and expertise of our investment partners have allowed us to build a resilient, robust and sustainable organization that will continue delivering premium products and services to homeowners for many years to come,” said Jenilee Common, chief executive of Leaf Home.

Doug Farr, who worked for Erie for 20 years, left when Gridiron took over. He opened his own company, Great Lakes Remodeling, and isn’t looking to sell. But he said it was getting harder to compete against private equity-backed rivals with cash to pour into recruiting, technology and advertising.

“Then you’ve got little old me, and I’m fighting that,” Mr. Farr said. “It’s a lot more difficult today because the industry is filled with a bunch of private equity money being thrown everywhere.”

Written by Lydia DePillis. She reports on the American economy for The New York Times. This article appeared in The New York Times on 11/13/25.