Insights From the 2024 Harris Williams Commercial & Residential Services Conference

Harris Williams recently hosted its inaugural Commercial & Residential Services Conference, gathering executives, noted thought leaders, and investors active in the space to connect, exchange views, and participate in timely and relevant sessions and panel discussions.  

Below, senior professionals from our Business Services Group and Consumer Group share key insights into the future of the commercial and residential services space drawn from sessions, conversations, keynote speakers, and presenters at this year’s event. 

Conference sessions:

• Economic Forecast: Impact of Seismic Surprises

• A Cultural Phenomenon: Key Ingredients for Success

• Making Sense of Today’s Politics

Economic Forecast: Impact of Seismic Surprises 

Dr. Marci Rossell, former CNBC Chief Economist and Co-Host of SQUAWK BOX

To kick off our event, we were joined by expert economic forecaster Dr. Marci Rossell, former CNBC chief economist and co-host of SQUAWK BOX, for a discussion covering the U.S. economic outlook for the next 18 to 24 months. Dr. Rossell shared her perspectives on important economic events and the impact of inflation, supply chain disruptions, labor shortages, and other key trends and topics shaping M&A across the commercial and residential services landscape. 

“Overall, Dr. Rossell emphasized the relative strength of the economic environment and the potential it holds for ongoing growth in commercial and residential services,” says Brian Lucas, a group head and managing director in the Business Services Group. “Her perspectives on the health of the consumer and of the labor market compared to prior periods were especially informative.”  

Specifically, Dr. Rossell discussed the Federal Reserve's move to normalize interest rates and its impact on the economy, including effects on sectors like residential real estate, M&A, and IPOs. “Comparing the commercial real estate market of the 1990s to today’s market yielded some key insights,” says Lucas. “While the economy was in a similar state in terms of inflation and rate actions, the savings and loan crisis led to significant credit constraints, which is not the anticipated scenario in today’s market.” 

However, the struggling Chinese economy is a new factor for investors and industry participants to consider. The slowdown in the Chinese economy due to factors like excessive real estate debt, deflation, and demographic decline threatens to become a drag on the global economy if not addressed effectively. Conversely, jobs are plentiful in the U.S. and the labor market remains tight, helping reduce fears of a consumer-led recession.  

“We came away from Dr. Rossell’s session with a deeper perspective on the relative strength of the U.S. economy and its growth prospects,” says Lucas. “The insights she shared should boost the confidence of anyone active in this space.”

A Cultural Phenomenon: Key Ingredients for Success

Mike Cox, CEO, Crete United
Jenilee Common, CEO, Erie Home
Matt Malone, Founder and CEO, Groundworks

The day’s second session focused on developing a strong culture with a distributed workforce and maintaining that culture while scaling. From driving growth to creating differentiation in the market, panelists agreed that building a culture that resonates with employees is vital for success across commercial and residential services. “Panelists emphasized that they want their employees to build a career, not just have a job,” says Brent Spiller, a group head and managing director in the Harris Williams Consumer Group.  

According to the panelists, key pillars of strong culture include talent development and leadership training, promoting an entrepreneurial spirit with incentive programs, promoting from within, emphasizing safety as a core value, and promoting transparency, compassion, and ownership among employees.  

Panelists also shared insights on scaling their businesses, including investing in technology, data analytics, and training to drive adoption of new systems. They highlighted the challenges of labor shortages and the need for more systemic efforts to develop skilled trade talent.  

“The availability of technicians and skilled labor is going to be a challenge,” says Spiller. “Panelists said getting the work isn’t the problem—it's executing it safely and proficiently.” Indeed, members of our panel noted a talent deficit in skilled trades across the country, and the need for better training and development for new talent coming into the industry. 

Tight labor also makes it imperative for commercial and residential services companies to focus on talent retention. Panelists cited strategies such as more transparent career paths, generous benefits like pet insurance, and, once again, a culture of ownership and entrepreneurship. “Providing equity ownership to the workforce, even at the non-management level, has been a major success factor for companies like Groundworks,” says Spiller. “It aligns the team toward a common mission and drives a sense of ownership, which is essential to building a long-lasting, industry-leading company.” 

Making Sense of Today’s Politics

Jonathan Martin, Politico

Harris Williams wrapped up the day with an engaging conversation on the ins and outs of campaigns, government, politics, and policy, discussing some of the most significant moments shaping the U.S. political landscape with Jonathan Martin, politics bureau chief and senior political columnist at POLITICO. The tightness and uncertainty of the U.S. presidential race were a major area of focus during the session.  

A vibrant Q&A session brought a number of key issues to the fore, including the personalities and governing styles of both Harris and Trump based on Martin’s personal interactions, as well as both candidates’ pragmatism and lack of firm ideological foundations. 

“The clear takeaway from the session is that in the coming weeks the news cycle is going to be heavily focused on these and other issues,” says Taylor Morris, a managing director in the Business Services Group. “While we’re going to be watching the election results closely, past experience suggests the state of the economy, the financial markets, and company performance will be the key factors for M&A in our industry.”

Conclusion

While there’s plenty of uncertainty to manage in today’s environment, it’s clear from these panel sessions and our many interactions during the conference that optimism abounds for M&A in commercial and residential services. 

The long-term fundamentals of the space are intact: non-discretionary and/or low deferability of services, high fragmentation among providers, and favorable demographic shifts creating growth runway. Against a backdrop of an improving economy, leading commercial and residential services companies are focusing on building businesses that will stand the test of time. 

To learn more about opportunities in this dynamic space, please contact us.