LightBay Capital and Freeman Spogli & Co, which have partnered on several past investments, are expected to announce the acquisition of residential services company Infinity Home Services later this morning, according to sources.
The deal represents a focus on a market segment viewed as somewhat insulated from economic cycles. Non-discretionary residential services, like replacing a leaky roof, are seen as a necessity no matter how the economy looks.
Infinity provides a “must-have service that plays on the aging housing stock … in the US versus something more discretionary,” a source said.
The company’s existing investor, North Branch Capital, will retain a significant stake going forward, sources said. North Branch formed Infinity last year with its acquisition of Infinity Exteriors, Overhead Solutions and Premier Roofing & Exteriors.
Josh Sparks, Infinity Home’s CEO, along with current management, will continue leading the company.
Other factors that make residential services attractive for private equity include the desire for property owners to continue making home improvements, a trend that took off during the health crisis when people were stuck at home.
As well, residential services companies are ripe for consolidation as competition exists from local small businesses formed by technicians who have grown into business owners, sources said. “There’s value in consolidation … while still keeping that entrepreneur local owner active and engaged in their market,” one of the sources said.
LightBay and Freeman teamed up on past deals, including Propelled Brands, which owns brands like Fastsigns and NerdsToGo.