By
most measurable standards, Tecta America is having another great year
in the roofing business. The annual revenue reported for 2023 was $1.4
billion, placing the company atop RC’s 2024 Top 150 List. The
number of employees has grown to 4,400, and they are consistently
delivering high-quality work, including several projects and a growing
list of impressive industry awards.

Part of the winning formula
that’s worked for the Illinois-based national commercial contractor for
more than two decades is baked in by bringing top-notch roofers aboard.
It’s part of the company’s DNA, considering it began when the leaders of
nearly a dozen roofing contractor companies partnered with a purpose —
to bring the best roofers together to learn, share and replicate best
practices while offering a national footprint. 

In its first two
decades, the company grew from 17 to 75 locations across the country
through a deliberate yet aggressive growth strategy that never seems to
slow.

One could argue that Tecta was a pioneer in the roofing
acquisition space, going through a series of private equity
partnerships, including the 2018 purchase by Altas Partners.
Since then, Tecta’s trajectory soared through acquisitions of
well-established and successful roofing companies, including century-old
RSS Roofing Services & Solutions
in St. Louis (2018); Empire Roofing in Fort Worth, Texas (2021);
Mahaney Roofing in Wichita, Kan. (2022); CE REEVE Roofing in
Indianapolis (2023), and the Eberhard Companies based in Van Nuys,
Calif., and Las Vegas earlier this year. 

RC recently
caught up with CEO Dave Reginelli and Mark Santacrose, Tecta’s executive
chairman and former president, to put some of their success into
perspective with today’s volatile marketplace and take a closer look at
the strategy continuing to put them at the top of the commercial roofing
profession.

Congratulations on being at the top of our Top 100 List for 2024. How is your year going? 

Dave Reginelli (DR): It’s
gangbusters right now, we’re very busy. After supply chains loosened up
last year, we’re in full swing and back to normal, hitting on all
cylinders. Our backlog … I won’t say it’s at record level, but it’s very
close. By pre-COVID historical standards, we are still sitting on more
months of supply of backlog than before COVID. 

How would you assess the state of the roofing industry right now? And Tecta?   

DR: There
are some segments that did slow down a bit, as you’d expect, like the
interest rate-sensitive ones. Most industries that we provide services
to, like heavy industrial, hospital and institutional facilities, are
still strong right now. 

Mark Santacrose (MS): Even
after all these years,I remain quite impressed with how Tecta is doing.
From a financial standpoint, things are really strong, and our people
are really motivated. Our culture is really strong. We are very active
in the market and looking at potential acquisitions. We are talking to
folks all the time. 

Tecta continues to make bold acquisitions. How is the climate different from a year or two ago?   

DR: Our
track record of successful acquisitions over the past 24 years has
given us credibility when talking to owners looking to sell. There is a
lot of activity and a lot of interest in the market right now. Private
equity has moved into the roofing space in a big way and is very active,
though surprisingly, few deals are actually getting done. The few deals
that are getting done are taking a long time to close.

We’ve
increased our ability to talk to more people, so I’d say we’re probably
having twice as many conversations as we have over the years. We have a
proven and predictable acquisition model and process. So, we’re talking
to a lot more people on the front end, but you know what gets through
our funnel? It’s pretty much the same high-quality companies that we’re
always interested in. 

MS: I started at Tecta in
2000, and at the time, there were private equity-led consolidation
efforts that were going on. And here we are back in a similar time
again. I’d say there’s a tremendous amount of activity from a whole
range of private equity firms. A few of the firms doing deals seem well
capitalized but that is not the case for most of them. It’s a scattered
environment out there. Lots of action but inconsistent capabilities. 

Why is there so much private equity interest in roofing right now?  

MS: The
people driving private equity decisions today … don’t really
understand that most of the private equity firms involved in the
industry in the early 2000s did not turn out well. In fact, we acquired
what was left of a number of them. The memories of the industry and the
investment world are relatively short. 

It’s also no secret that
we’ve grown significantly and created a good amount of value for our
investors and our employees. And so people see that and think, “Let’s
give it a try.”

Tecta also had challenges along the way. What stands out in your mind?  

“Our track record of successful acquisitions over the past 24 years has given us credibility in the market when we are talking to owners looking to sell. There is a lot of activity and a lot of interest in the market right now. Private equity has moved into the roofing space in a big way and is very active.”
— Dave Reginelli, CEO

DR: Tecta
went through some tough times with our first private equity owner, and
as a result, it solidified who we are today. And that’s what we’ve stuck
to, that business model. We give our field leaders tremendous autonomy
to run their businesses like they are still the owners and they thrive
in that environment. They don’t want to be told what to do by someone
six states away.

We view private equity more as financing for our
hard deals. So, when someone sells to someone like us, they sell to a
strategic buyer who truly understands the industry. Today, I think
there’s a new rush of money into the industry, but understanding what a
contractor goes through on a day-to-day basis is really important, and
it’s a lot different than a lot of other industries. 

How have you learned to help roofing contractors through acquisitions and growth?  

DR: We
understand the business, so everything we do at the corporate level
during an acquisition is designed to make the contractor’s life easier
because we know they already have a difficult job. All the things they
have to deal with, whether it’s compliance matters, funding, banking,
medical coverage, all the various things that take time away from the
core business of roofing. That’s the real business; everything else is a
distraction, so our model has really helped these contractors. I also
think others have seen our success and are trying to replicate it, but
it took us 20-plus years to get there. 

MS: I’ll
just add that it’s not because we’re all that smart. We’ve made
mistakes. We’ve done lots of things that we regret. We’ve got lots of
scars on our back, which is a great education. And you know, we’ve tried
lots of different things, but we’ve never really gotten away from that
core model of the local roofing contractor is really the most important
part of the foundation. Everything else we do is to try to add value to
them. 

How successful have Tecta acquisitions been and why? 

DR: We’ve
done over 51 deals since 2000 and 31 in the last 10 years, and really
we’ve only had one mediocre outcome. We don’t look for sellers; we look
for partners. That’s a key point to remember. This approach has helped
us to grow to over 60 business units and 100 locations across the U.S.
since we were founded. Our Mission Statement is unique — it’s quite
simple, “To be the best place to work in the industry.” That’s it. And
we work extremely hard every single day to make that a reality.

What is the due diligence process like?

DR: Our
due diligence involves getting to know the key people in the
organization and making sure that it’s a good fit. As you know, this is a
people business at its core. So, we approach every acquisition with an
eye on making sure that all of the people are taken care of. We hire
every single employee when we buy a company and want them to do the same
or better under Tecta as they did before.

Also, our approach to
working with each business unit is different as well. We use an “opt-in”
model on most everything we do, instead of “push-down,” meaning that
the local business isn’t mandated to all of a sudden change how they run
their entire business once they are part of the Tecta family.

How is Tecta’s acquisition strategy different?  

“We’ve made mistakes. We’ve got lots of scars on our back, which is a great education. And you know, we’ve tried lots of different things, but we’ve never really gotten away from that core model of the local roofing contractor is really the most important part of the foundation. Everything else we do is to try to add value to them.”
— Mark Santacrose, Executive Chairman

DR: Think
of us as a strategic buyer rather than a financial buyer like private
equity. I think the difference is that they have to go through a lot of
the learning that we’ve got under our belt. We’ve kind of seen it all as
far as how companies are successful and how they fail. As we have said,
with our experience making more acquisitions in this industry than
anyone else, we’ve learned what works best for the owners and employees
of the companies that we are buying. Many owners looking to sell want to
ensure that their company will be in good hands moving forward. They
see that we are in it for the long term and that we are the best company
to partner with.

What scares you about the frenzy of acquisitions in the marketplace? 

MS: A
challenge that folks new to the industry are going to have — folks that
want to make a bunch of acquisitions and then dissolve the business but
don’t do the hard work of integration, getting people on the same
systems and set up to grow as far as they want to grow. 

How has Tecta responded to the increased M&A activity in roofing recently?   

MS:
We have done quite a lot to expand our efforts internally to do even
more acquisitions. We hired John Massarelli in the last year to
spearhead our efforts in the market. John has been in the industry for
almost 20 years and brings a unique skill set to the table, as well as a
vast network across the entire industry. We’ve known John for many
years, and he fits our culture extremely well. We recently promoted
Kevin Palmer to president to assist Dave in running the day-to-day
business. Kevin was one of our most successful operating unit
presidents, and we are thrilled to have him join the corporate team and
help support our field leaders. Kevin’s promotion will also allow Dave
to become more active along with John to find, close and develop
acquisitions for years to come.

DR: Our financial
team, led by our CFO Marc Benson, is super strong. I don’t think that
there is a team anywhere that has looked at more contractors in this
industry than Marc and his team. We are lean here, but that allows us to
move fast if needed. In fact, we feel that we have the ability to close
deals faster than anyone in the market, and we see that as a big
competitive advantage.

When will the activity end, or at least slow down? 

MS: It
dries up with the returns. If returns continue to be strong, it’ll
continue to be strong. They can also take their money to other
industries or investment opportunities. When the firms that get in have
to exit or run out of money, which is the case with a couple of them,
especially in a tougher financing market, they’re no longer able to get
transactions done. Then we’ll find out when it’s over. 

DR: If
there are some bad outcomes, it’ll change fast. It will come in quickly
and go out just as quickly. The real risk of the contractor selling is
that’s their legacy; often, that’s their family name. They built their
business with their people, putting it all into an unknown environment. 

What are you proud of?

MS: One
of our core original contractors, John Miller, established a
scholarship program when he retired that’s available to employees or
their children who want to go to college. Last year, we surpassed over
$1 million in total scholarships given out. We are extremely proud to
continue that legacy.

What’s next for Tecta America?

DR: Many
companies are considering a strategic partnership, and the pipeline’s
never been bigger for us. We thrive on bringing great contractors in.
It’s exciting for them, for us and for our extended family of people.
I’d say it’s never been more active than now, and we’re going to be
focused on that, and I think 2024 is going to be better than 2023. We’ll
see how 2025 develops, but I think all signs are positive right now.