Strategic Exchange: As market headwinds persist, the commercial market offers some relief – June 2026

By Kemp Harr

It’s time for a reality check on the state of the business as the conflict in Iran drags on. It’s true that we’ve seen prolonged periods with mortgage rates in the mid-6% range in the past, but when you couple the high cost of borrowing with inflated housing prices and reduced disposable income due to higher food and fuel costs, you end up with consumers who are choosing to sit tight on any major housing investments.  

Granted, with each passing month, pent-up demand continues to rise, and we are still seeing activity on the upper end of the remodel market from those who have done well with their investments and who recognize conditions will improve eventually. 

Thank goodness for the lift we are seeing in the commercial market. I’m looking forward to spending time in Chicago this month learning more about the strength of the backlog and the latest trends in the commercial interior market. 

PACELINE INJECTS $240 MILLION IN DIVERZIFY

It was encouraging to learn that Dallas-based PE firm Paceline Equity Partners feels bullish enough about the commercial flooring market to inject $240 million in cash into Diverzify—the largest commercial flooring contractor in the U.S. with a national scope that includes roughly 60 locations and over $1 billion in annual revenue. You may recall that Diverzify doubled its size back in early 2022 when it purchased Spectra Contract Flooring from Shaw Industries. 

You may also recall that the lead investor prior to this recent Paceline move was Washington, D.C.-based Acon Investments—another PE Firm. Acon’s initial investment in Diverzify was in May 2021. Since that investment five years ago, Acon made several changes at Diverzify that had mixed results. First came an abrupt change at the CFO level, followed by the hiring of a CIO who invested extensively in an ERP system that never really delivered as promised. At the same time, many of the sales leaders who were part of the individual companies acquired by Diverzify during the initial roll-up became disenchanted and left one by one. 

Acon Investments has stumbled before. In 2018, the PE firm purchased a controlling stake in True Value Hardware with a plan to modernize the business, free up capital for store owners and improve supply chain efficiency. Six years later, True Value, which had been a co-op prior to the acquisition, filed for Chapter 11 bankruptcy and was ultimately purchased by Do it Best. During that six-year period when Acon was in the driver’s seat, many stronger store owners migrated to Ace or Do it Best and were able to cut a better deal than what the retailers who stayed with Acon until the end were able to negotiate. By the end of the bankruptcy filing in 2024, reports indicated that True Value had incurred between $500 million and $1 billion in liabilities.

Now, with the injection of capital from Paceline, Diverzify is back in the black with a healthy backlog of commercial projects. In the week following the news of Paceline’s investment, Diverzify sent out an internal announcement about several sales leaders who have been promoted. Jordan Zmijewski, the son of Leonard Zmijewski, remains the CEO and chairman of the board for Diverzify.

Paceline is not new to the flooring industry. It is the PE firm that owns AHF Products. After learning this news about Diverzify, I reached out Brent Emore, CEO of AHF, and he assured me that there was no plan to look for synergies between the two entities that would interrupt the channel strategy AHF has developed to support its current base of customers. It does, however, show that Paceline sees the flooring business as a viable category for continued investment. 

BED BATH & BEYOND TO BUY F9 BRANDS

While we are on the topic of ownership changes, we should mention the announcement in April that publicly traded Bed Bath & Beyond (BBBY)—owner of Bed Bath & Beyond, Overstock, Buybuy Baby and Kirkland’s—is in the final stages of acquiring F9 Brands, which owns and operates Cabinets To Go, Lumber Liquidators and Southwind Building Products, for $150 million in cash and common stock. F9 Brands’ revenue in 2025 was roughly $522 million. Jason Delves will serve as CEO of Beyond Home Services, the new name for F9 Brands following the acquisition. 

Marcus Lemon, best known as the founder of Camping World, is the chairman of Bed Bath & Beyond, and his vision is to build an “everything home company” through a national franchise system. Details for how all the parts fit together are still being finalized, but according to Delves, the plan is to give Southwind’s dealers the option to offer more products to its consumers from the Container Store and Cabinets To Go sides of the business. n

For comments on this column, email kemp@floorfocus.com.