Private equity and the resilience of independently owned commercial flooring business – Nov 2025

By Chuck Bode

As the co-founder of CB Flooring based in Columbia, Maryland and as the former chairman of Starnet Worldwide, I’ve become a bit of a student of the various ownership options that exist for commercial flooring contractors. While serving as Starnet’s chairman from 2018 to 2024, I witnessed firsthand private equity’s (PE) desire to enter the commercial flooring world. At that time, interest rates were extremely low, and acquisitions and attempted acquisitions were running rampant through the membership.

Starnet was originally founded to provide a forum for independently owned commercial flooring contractors to meet and discuss mutual topics of interest. Over the years, I got to know most of the people who were the backbone of the entrepreneurship that started these original enterprises. These people were risk-taking entrepreneurs of the highest caliber. The entire co-op was built around operators who knew how to actually run a flooring business.

Then, private equity entered our industry.

It seems that the appeal of PE acquisitions was an opportunity for aging Boomer owners to cash in on all their hard work over many years. At one point, there was concern that independently owned contractors were a thing of the past, and that the ongoing consolidation in our industry might threaten the very existence of the co-op. Here’s my take on where this is all headed. 

THE PRIVATE EQUITY MINDSET 

To understand the big picture, you need some basic understanding of how PE firms think.

When PE buys a business, it incurs substantial debt service to fund the acquisition. That debt ends up on the books of the acquired business. The main goal of PE is to “improve the business” (i.e., increase profits while cutting costs). But the overall objective of the PE funds is to eventually resell the acquired business back into the public markets. Only then do the original investors in the PE group get any money or dividends.

Things have not gone well for PE firms in the last couple of years, as high interest rates have raised acquisition costs, threatening returns on investment. This is why they are now seeking access to the public markets for much-needed cash infusions (such as being allowed into 401(k)s).

The real reason independently owned dealers need not worry is that the decision-makers within PE firms cannot tell the difference between a bag of Ardex mortar and a bag of mulch. These are financial people, concerned only with making a profit on the flip side of the transaction, not with the details of the acquired business.

What original ownership and entrepreneurship bring to a business cannot be duplicated, because the ultimate mission of PE is misplaced-reselling the business. This goal is incompatible with running a successful business.

THE OUTCOMES 

I have yet to see any commercial flooring contracting business that I am personally aware of improve post-acquisition. What I do see is incredible employee turnover and deep frustrations with internal software changes made in an attempt to get all acquired companies on the same page. Many of the original entrepreneurs are quick to leave the firms they started post-acquisition as soon as their contracts allowed. Many of these acquired firms are now mere shells of their former selves.

No one watches over or pays attention to a company like the founding entrepreneurs who built it. After all, it’s their capital at risk! My wife and I built a $100 million company in the Baltimore-Washington, D.C. area with 200 employees, and it was not easy. We worked hard every single day for long hours. We were in tune with the wants and needs of our employees and customers. As a family business, we were eventually lucky enough to have two competent children take over the reins as we got older.

The real way for independently owned commercial flooring dealerships to survive the consolidation phase in our industry is to maintain what I call a “fortress balance sheet.” As long as you pay your bills on time and take good care of your customers in the field, you will always have a business. I wouldn’t spend any energy worrying about the big guys. Stick to the knitting, focus on what you are doing, and you will be just fine. Being much more “nimble” than most corporate managers allow is a big advantage. It seems that the bureaucracies of these larger roll-ups slow down decision-making to their detriment.

In my opinion, the death of the independently owned and privately operated commercial flooring contractor is greatly exaggerated!

Related Topics:Starnet