Furniture Roll-up Strategy

A strategy to acquire undervalued furniture retailers, modernize their operations through digital transformation, and create value through roll-up economics. The approach focuses on buying established furniture companies at low multiples and selling the combined entity at higher multiples due to scale.

Key Points:

• Acquisition Strategy:

  • Buy antiquated furniture retailers at 7x EBITDA
  • Target companies: Z Gallerie ($20M), Surla Table ($89M), One Kings Lane
  • Focus on undervalued companies with digital transformation potential

• Value Creation Levers:

  • Close underperforming retail locations
  • Enhance ecommerce capabilities
  • Modernize customer data systems:
    • Extract historical customer data from legacy systems
    • Integrate with modern marketing tools (email, Facebook ads)
    • Build unified customer database across properties

• Roll-up Economics:

  • Buy individual companies at 7x EBITDA
  • Combine companies to reach $20-30M EBITDA
  • Sell combined entity at 15x EBITDA multiple
  • Value creation through multiple arbitrage

• Operating Model:

  • Build systematic approach to acquire and integrate furniture retailers
  • Create playbook similar to Constellation Software's approach to SaaS
  • Focus on furniture vertical to develop expertise and efficiencies

• Exit Strategy:

  • Scale to size attractive to larger institutions
  • Leverage higher multiples available at greater scale
  • Position as digitally-transformed furniture retail platform