45 minutes with Redwood Services CFO Shaun Hardick

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Our long-term vision is to be the premier home services platform in the world.

Shaun Hardick is the CFO of Redwood Services, a home services platform that’s currently partnered with 12 businesses in 11 states.

Shaun is Redwood’s Texas native deal-man who loves sports and dabbles in sci-fi. We had the chance to talk to him about his background, his thoughts on the market, and his role at Redwood.

Have you always been interested in finance?

I went to the University of Texas (Austin) for accounting. I started my career at a Big 4 firm in audit but quickly learned I didn’t like it. So I made a move to PwC, in their deals practice, effectively helping large private equity funds purchase businesses. I got to see a lot of transactions and business models over the three years I was there.

I’ve always been fascinated by the world of business and finance. I like to think strategically, from a 30,000-foot view.

How’d you end up at Redwood?

I’d helped all of these companies build successful businesses and then get acquired, and I thought I could help a growing business do the same — so I got the itch to join one. One of the transactions that came across my desk was a legal services business combining with a complementary platform, led by a young CEO named Adam Hanover. After the deal closed, he called me and asked me to join him in building the business, so I did and ended up working with him for a few years.

Adam and his father Marc eventually sold their stake in that business, and a couple of years later called me with a new opportunity in Memphis. He was helping start a home services investment business that needed a CFO and deal leader — and thought I would be a good fit. I wanted to build something from the ground up and to be a part of a growing, winning team, so I flew down to Memphis to meet Richard Lewis, the CEO. Six weeks later, I was living in Memphis as Redwood’s CFO.

What’s the story behind Redwood?

Our long-term vision is to be the premier home services platform in the world. Richard, our CEO, had previously worked with Terminix where he saw them doing 50 deals a year, but noticed that after the acquisitions, the businesses would start to go backward.

He thought he could do that, but in a way where everybody wins. So he quit his job, landed on HVAC and Plumbing for a variety of reasons, and launched Redwood in March 2020.

What does your day look like?

I think about my job in three buckets, which align with Redwood’s three major business goals each year. The first is M&A, which is finding and closing new deals. Redwood has an internal inorganic growth target each year that drives our M&A goals — so the focus is to meet/exceed that target. Second, Redwood targets 15% EBITDA growth per year for its Partners. That’s our goal, and we invest a lot of time and operational help from the Partner Support Center to support our Partners in achieving that goal.

And third, I think about how we can build the most sophisticated home services investment holding company that we can. The goal is to build a business that will command a premium transaction multiple — if we decide to sell a piece of the business.

Tell me about the M&A process.

We look at two things: the people and the business. If the partner isn’t right, then it’s a non-starter. So we ask: Has this business been around for a while? Is this someone we want to work with? Do they care about their people?

Then there’s the investment lens. What’s the business mix? Do they do any new construction? We think about where we can come in to coach, learn, and professionalize.

What trends are you seeing in the market?

HVAC installs are down this year compared to previous years, and there’s a bifurcation of performance: the good operators and everyone else. The really good operators are adjusting in real-time.

There’s also an increased focus on plumbing. The average tickets are lower, so there’s not as much of a need for financing, which is good given the high interest rates. It’s also less seasonal than HVAC.

Is there anything that makes you nervous about the future?

A couple of things. This is where my macro hat comes on. When you raise interest rates by 500 basis points, things will break. The consumer will get squeezed, replacements go down and repair goes up. You won’t be able to finance as many jobs because the cost of credit is up.

And interest rates affect asset prices. As rates go up, the price of assets comes down. So If I’m a contractor and I think my company is worth a certain multiple, but interest rates are up, I may not be able to command the same multiple as when rates were low.

Do you have any hobbies or outside interests?

I love sports. I was born and raised in Dallas, so all of the Dallas pro sports, and the Texas Longhorns. I play a lot of golf, and like to invest my own money. I also read sci-fi books — I think they’re creative.

If you could have dinner with anyone in history, who would it be?

I love people who are resilient, hard workers and see success. So call it a bit of a cop-out, but Michael Jordan. Doesn’t make his high school basketball team, then two years later ends up starting as a freshman at UNC. Overcoming initial obstacles. The guy’s just the ultimate competitor. Seeing his day-to-day process would be fascinating. He’s a legend of sport.