A year-and-a-half ago, nobody’d heard of Clio Holdings LLC. Today, it’s one of the largest stone fabricators in North America … and still a firm that is relatively unknown, even in the hard-surfaces industry.
Part of Birmingham, Mich.-based investment company Oakland Standard, Clio Holdings grew quickly by acquiring six well-run and well-placed U.S. fabrication companies. With support in the deals by O2 Investment Partners and Tecum Capital, it’s made more news in the financial sector to date than with the trade.
Clio’s been relatively quiet about all this to date — it’s stayed in the background and hasn’t even changed the names of any of the acquired companies. Founder Bryan Tolles says it’s all part of the strategy … but that you’ll likely be hearing more from the company by early 2018.
A year-and-a-half ago, nobody’d heard of Clio Holdings LLC. Today, it’s one of the largest stone fabricators in North America … and still a firm that is relatively unknown, even in the hard-surfaces industry.
Part of Birmingham, Mich.-based investment company Oakland Standard, Clio Holdings grew quickly by acquiring six well-run and well-placed U.S. fabrication companies. With support in the deals by O2 Investment Partners and Tecum Capital, it’s made more news in the financial sector to date than with the trade.
Clio’s been relatively quiet about all this to date — it’s stayed in the background and hasn’t even changed the names of any of the acquired companies. Founder Bryan Tolles says it’s all part of the strategy … but that you’ll likely be hearing more from the company by early 2018.
Q: Prior to forming Clio, did you have any background with the stone or construction industry at all?
Bryan Tolles: The stone industry, no. The construction industry, absolutely. I grew up on a construction site; I was pouring concrete for my family’s Ready Mix business in Florida since I can remember. Professionally, post-college, I gravitated back into the building-products industry, and I’ve been investing in the construction space for the last 10 years.
Q: What drew you to stone fabrication as an investment area?
Tolles: Before Clio, I was very involved in the acquisition of dozens of construction distribution businesses. A big — and one of the more-profitable — pieces of our business was cabinet distribution, and an adjacent market to that clearly is the countertop-fabrication industry. It’s been intriguing for the last five or eight years, just because it fits so well with our cabinet section. But the interesting thing that I’ve found about the stone-fabrication business is that there is a sourcing, a manufacturing and a service business all-in-one. And when you have business models like that, there’s often significant benefits of skill. And that’s what we’re looking for to realize here at Clio.
Q: What three factors are the most-important for you at a stone fabrication company? I’m sure you have many, but there are probably a couple that stand out.
Tolles: There are probably 30. But, just for an initial, cursory pass, one is market share. That is the most-important, probably followed by customer diversity and then depth within the management teams — how scalable is the business, or is it reliant on one or two individuals?
Q: Are you finished with the acquisition phase at this point, or are you still looking to add companies?
Tolles: We’ve only just begun. We’re excited to announce some new partnerships here towards the end of the year, and also the beginning of next year.
Q: Some people might say that Clio sounds like a classic roll-up kind of thing. Would you agree or disagree with that?
Tolles: The term roll-up has this kind of negative connotation across industries, and not just in the construction industry. I prefer not to use that: We’re bringing industry leaders into a consolidation strategy. That facilitates profitable growth, which is probably the most-important driver for us.
When we look at a business, the first thing that comes to mind is where we can invest and grow the company, whether it’s into new channels, new products, new locations, new customers. Not where can we take out costs.
I think some cost is going to naturally come out of the system, whether it’s for material purchasing or efficiency, equipment, insurance, benefits and finance. But the thing that’s most important to us: Where can we take these businesses further?
Q: There are some areas that fairly easy to standardize, but there are other areas that you recognize that are different in each market that you don’t want to basically just take a one- size-fits-all approach. Is that fair?
Tolles: You can’t take a one-size-fits-all approach when it comes to the construction industry. We learned this when we were acquiring a bunch of lumberyards and building-supply businesses. There are different codes, different practices, different construction methods, different color preferences where a one-size-fits-all just doesn’t work.
For example, we owned a bunch of businesses in Minneapolis. In Minneapolis, builders prefer the lumberyard to install the lumber and windows. That is a regional preference. You go over to Wisconsin; they don’t want you doing that at all. That’s just two states that are adjacent to each other. There’s different preferences like that kind of across the board, and we recognize that. So, when there’s something that’s in customer or employee interfacing, we like to keep that local.
But where there’s opportunities for the benefits of scale that we’re looking for, absolutely we’re going to chase those too. But, we need to be flexible in our approach.
Q: Will this be any future branding of Clio as the corporate owner? Or is there going to be any kind of private labeling branding of materials that would be used by the different partners that you have?
Tolles: Stay tuned for that. There’s some exciting developments that are in process that we hope to be able to announce at the end of this year, and the beginning of next year.
Q: What surprised you the most about the stone-fabrication business as you’ve progressed?
Tolles: I’m surprised and impressed with the level of technology that is just now being implemented. Not just in the manufacturing area, but also in field management, whether it’s measuring technicians, customer sign-off, the sales process. And our goal with Clio is to embrace as much technology as possible and use that to facilitate growth throughout all of our markets.
Q: Do you think that we’re going to see more investments groups in the stone-fabrication market, or is this where one person, or one company, can come in and then another is probably not going to be as good?
Tolles: There’s probably a fair bit of interest in the stone-distribution side with a couple of private-equity groups that are involved there. The difficult thing about the stone-fabrication space is that there are very few industry participants with real scale; think $50 million to $100 million of revenue. And when it comes to investment groups entering a market that they often want to enter through a platform that can be scaled, and their investors are relying on them to find opportunities to put real money to work. Not just a couple million bucks here and there, but tens, twenties, hundreds of millions of dollars.
We started very small, with very humble beginnings, and that’s not something that I say a lot of investment groups would be willing to do. But we have big plans. We started with a business that had $10 million revenue, and now we’re north of $100, $135, $140 million revenue.
That’s going to, I think, be the limiting factor for other investment groups. There’s always a potential.
Q: What kind of countertops do you have in your own home?
Tolles: You should probably know that my wife is an architect who managed a kitchen/bath studio.So, we have a range of products in our home.
Actually, we just finished a couple of months ago. The kitchen island is Greystone marble with Tahiti quartzite around the perimeter in the kitchen. We have Nero Tunisi marble in the bar; we have a wood countertop in the powder room. The master bath is an Opal White marble from Antolini, and I’ve got limestone counters in my master closets.
We have Illusion quartzite in the basement bar and kitchen. My kids’ bathroom is white Caesarstone quartz; same with the laundry room. There’s porcelain in my wife’s master closet as well as a guest room. And, there’s honed black granite for the outdoor kitchen. So, we went the full gamut of stone throughout the house.
And I picked every single slab. That was a very big passion of mine when we were building our home; same with my wife. She’s been doing this for a while, and having the opportunity to do her own house, we were both very excited about it.