Builders FirstSource to Acquire Software Solutions WTS Paradigm

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Builders FirstSource, Inc. announced a definitive agreement to acquire WTS Paradigm, LLC, a software solutions and services provider for the building products industry, for approximately $450 million in cash.

The acquisition represents a significant step forward in Builder FirstSource’s strategy to invest in innovative digital solutions that will assist its customers in building more efficiently.

Hundreds of customers, including manufacturers, retailers, dealers, homebuilders, and remodelers, are served by Paradigm, which is expected to generate $50 million in revenue in 2021.

Dave Flitman, President and CEO of Builders FirstSource, stated, “Purchasing Paradigm is an important step in advancing our digital strategy to create significant construction process efficiencies through prudent investments in innovative technologies. Home construction lags far behind other major industries in the adoption of modern tools that can save time and money and reduce waste. Our unmatched scale, industry relationships and technical knowledge uniquely position us to increase the adoption of digital solutions across a fragmented customer base. Paradigm’s powerful technology platform provides us with an enhanced customer value proposition, helping fuel long-term growth by establishing a leadership position in digital solutions for homebuilders.”

Paradigm, headquartered in Middleton, Wisconsin, specializes in technology, software development, and consulting services that assist manufacturers, retailers, and homebuilders in the building products industry in increasing sales, lowering costs, and becoming more efficient.

Paradigm provides its customers with a streamlined process for configuring, estimating, and manufacturing complex products with numerous options, such as windows and doors.

Importantly, the acquisition of Paradigm will strengthen Builders FirstSource’s digital capabilities and align with the company’s broader vision of providing digital solutions that address pain points at every stage of the homebuilding process.

Builders FirstSource intends to continue investing in the core business.

According to Nathan Herbst, Founder and CEO of Paradigm, “I have always cared deeply about the success of our employees, our customers and this company. We will continue to be a great partner to all our existing customers. Becoming a part of Builders FirstSource will unlock new opportunities for our employees, introduce us to new customers and allow us to accelerate the adoption and deployment of our software to solve our customers’ complex business problems. I look forward to working with the Builders FirstSource team to enhance homebuilding through digital tools.”

Digital trends are accelerating across the homebuilding industry, and customers want more solutions that drive process efficiency in complex homebuilding projects.

The average residential construction project is currently difficult to manage, involving more than 60 material suppliers, 100 subcontractors, and numerous other service providers.

Increasing the efficiency of the construction process is an excellent opportunity for digital technologies.

Builders FirstSource has the resources and expertise to create technology and invest in innovation to address the challenges and inefficiencies in the homebuilding construction process.

These solutions will not only improve the home-buying experience for Builders FirstSource’s customers and supply partners but will also ensure better alignment and integration throughout the homebuilding project lifecycle.

The acquisition of Paradigm will provide tools to make doing business with Builders FirstSource even easier.

Establishing digital solutions leadership for the homebuilding industry is expected to drive growth and efficiency for Builders FirstSource’s distribution network by allowing it to align with customers more efficiently and seamlessly and better support the entire homebuilding construction process.

Subject to customary closing conditions and antitrust approvals, the transaction is expected to close in 2021. After the transaction is completed, Paradigm will operate as an independent subsidiary of Builders FirstSource.

Builders FirstSource’s financial advisor is Rothschild & Co, and its legal counsel is Alston & Bird LLP.

Zach is our contributor covering home improvement and building renovation business news.