#United States #Dallas #Lowe's #Sterling Group #Artisan Design

The Sterling Group's Strategic Move: Selling Artisan Design Group to Lowe's

In a significant development in the business world, The Sterling Group, a Houston-based private equity firm, has announced its decision to sell Artisan Design Group (ADG) to Lowe's Companies, Inc. for a substantial sum of $1.325 billion. This move marks a culmination of a six-year partnership and growth period for ADG under Sterling's management.

Artisan Design Group, headquartered in Dallas, Texas, stands as a leading provider of design, distribution, and installation services for a variety of interior surface finishes, including flooring, cabinets, and countertops. The company has a vast operational footprint, comprising 132 distribution, design, and service facilities across 18 states, employing over 3,200 personnel to coordinate installations for national and local homebuilders along with property managers.

Since the initiation of their partnership in 2018 with co-founders Larry Barr and Wayne Joseph, Sterling has played a pivotal role in supporting ADG's growth trajectory. Under their stewardship, the company successfully completed 15 acquisitions, primarily focusing on founder-led or entrepreneur-owned businesses. This strategic acquisition spree reflects Sterling's extensive 40-year history of collaborating with family-owned industrial enterprises, underscoring their commitment to nurturing these businesses.

The acquisition by Lowe's is poised to elevate the home improvement giant's Pro segment, introducing a new distribution channel in a highly fragmented market valued at around $50 billion. Marvin R. Ellison, Lowe's chairman, president, and CEO, emphasized the need for over 18 million homes in the U.S. by 2033, projecting that new home construction will significantly drive planned spending in the coming decade. He highlighted that integrating ADG into Lowe's offerings would expand their total addressable market by approximately $50 billion, creating new opportunities for both companies.

Ellison praised ADG's customer-centric operating model, noting their recognition as an industry leader based on positive customer satisfaction ratings from top builders across the United States. He expressed optimism about the collaboration and its potential to refine and enhance Lowe's Pro offerings for their expanded customer base.

ADG CEO Steve Margolius also shared excitement regarding the merger, stressing that their leading position in the flooring, cabinets, and countertops sectors, combined with Lowe's expansive reach and diverse product categories, would facilitate further growth. Margolius conveyed confidence that this partnership would enable ADG to offer an even more comprehensive range of solutions to builders and property managers.

The transaction is anticipated to close in the second quarter of 2025, contingent upon receiving necessary regulatory approvals and meeting other standard closing conditions. RBC Capital Markets and Goldman Sachs are acting as financial advisors for ADG, with Latham & Watkins LLP serving as legal advisor.

Insight into Artisan Design Group

Artisan Design Group was formed in 2016 through the merger of two prominent industry players, positioning itself as a key player in the design, distribution, and installation of interior finishes in the residential construction sector. The company not only operates in the production of flooring, cabinets, and countertops but also prioritizes customer satisfaction, which has been a cornerstone of their operational strategy.

The Sterling Group: A Legacy of Investment

Founded in 1982, The Sterling Group has established itself as a notable private equity and private credit investment firm, focusing on investment opportunities within the realms of basic manufacturing, distribution, and industrial services. With a portfolio boasting the buyout of 74 platform companies and several add-on acquisitions, Sterling has handled total transaction values exceeding $25 billion, currently managing assets worth $9.4 billion.

Lowe's: A Home Improvement Leader

Lowe's, a FORTUNE® 50 company, engages in approximately 16 million customer transactions weekly and boasts fiscal year 2024 sales exceeding $83 billion. Operated from Mooresville, North Carolina, Lowe's is committed to community support initiatives, including creating safe housing and fostering the next generation of skilled professionals in the home improvement sector.

This sale marks a strategic transition not only for Sterling and Lowe's but also reflects broader trends in the home improvement industry as companies continue to adapt to evolving market demands. The successful integration of ADG into Lowe's services could potentially redefine standards within the industry, setting a new benchmark for customer satisfaction and operational efficiency.