Garrhs, Inc. Transitions to Employee Ownership

We are thrilled to share news from American Dream Home Services (ADHS) that perfectly embodies our vision for the future of the home services industry: the acquisition of Garrhs, Inc., a respected HVAC and mechanical services provider in Durango, Colorado. This is more than just a transaction; it marks the beginning of a journey toward employee ownership for Garrhs’ dedicated workforce, ensuring its remarkable legacy continues to thrive.

A Legacy Built on Trust and Community

For over 60 years, Garrhs has been a family legacy rooted in Southwest Colorado, building a reputation on trust, integrity, and a deep commitment to its employees and customers. The company has consistently adapted to industry changes while maintaining its core values, which include providing high-quality work, honest practices, and complete customer satisfaction. Garrhs is recognized as the #1 HVAC provider in Durango, a testament to its reliable and conscientious work, as well as its remarkably high employee retention – a rarity in the industry. This nurturing approach has been a cornerstone of their success, reflecting a deep care for employee well-being and their families, even ensuring participation in retirement plans.

This strong foundation of integrity, community impact, and legacy preservation perfectly aligns with ADHS's own core values. Mark Oliger, Co-Founder of Garrhs, expressed this sentiment, stating,

"This is more than a transaction—it's a continuation of our family's legacy... Now, we get to pass it on in a way that honors that legacy while giving our employees a real stake in the future".

Why Employee Ownership? A Different Path Forward

Many business owners, particularly baby boomers, are looking to transition their companies, with 70% planning to sell in the next 10 years. However, a significant challenge exists: only 20-30% of businesses that go to market actually sell, leaving many owners without the opportunity to harvest their wealth. Furthermore, a striking 75% of business owners profoundly regret selling their company within a year after the transition. This regret often stems from a loss of identity and purpose, not choosing the right transition partner, or the unintended consequences of rapid changes under new ownership, such as high turnover and cultural shifts.

Traditional private equity firms often prioritize financial returns at a significant personal and cultural cost, sometimes pushing out founders and overhauling company culture. Will Petter, Co-Founder of ADHS, witnessed this human toll firsthand during his career in private equity, which motivated him to seek an alternative. He wanted to create a model that rewards all employees for supporting growth, not just a select few at the top.

This is where employee ownership, specifically through an Employee Stock Ownership Plan (ESOP), offers a compelling alternative. An ESOP is a qualified retirement plan that invests primarily in the company's stock, acting as a vehicle for purchasing stock from existing shareholders at fair value. It allows owners to transition their business on their terms, generating wealth for a comfortable retirement while safeguarding family values and rewarding dedicated employees.

Empowering Employees and Preserving Culture

The acquisition of Garrhs by ADHS means that Garrhs’ employees will now have a real stake in the future of the company. This transition empowers them through ownership, ensuring a secure and prosperous future for both the team and the Durango community. Employee ownership offers numerous benefits:

• Higher employee engagement and motivation: When employees have a financial stake, they feel more connected to company goals and outcomes, leading to a greater sense of responsibility and accountability.

• Wealth creation for all: Employees can build significant wealth through their ESOP accounts, which are $0 cost to them.

• Retention and talent attraction: ESOPs help with retention, especially in industries facing labor shortages like home services, and are attractive to skilled workers.

• Preservation of culture and values: Unlike some traditional sales, the ESOP model allows the company's unique culture and established values to remain intact and even be strengthened.

ADHS plans to provide additional investment and support to enable Garrhs' sustainable growth, while the Garrhs name, culture, and team will remain intact. Travis Oliger, now President of Garrhs, affirmed this, stating,

"ADHS shares our values and our vision. Together, we’ll grow, invest in our people, and keep doing what Garrhs has always done best—serving the community with integrity and excellence".

ADHS: Building a Nation-Wide, Employee-Owned Future

The acquisition of Garrhs is a significant step in ADHS's broader mission to become the nation’s most trusted employee-owned home services provider. ADHS aims to create a "millionaire middle class" of skilled tradespeople, including plumbers, electricians, roofers, and HVAC providers, by empowering them through shared ownership. This is achieved by combining the best elements of private equity's growth strategies, such as multiples expansion, with a heart, soul, and sustainability that prioritizes employees and legacy preservation.

Will Petter sees Garrhs as an "incredible platform" to launch this vision, recognizing their deep roots, strong values, and incredible team. ADHS seeks to acquire values-aligned businesses, gradually implement centralized corporate functions for efficiency, and achieve 100% employee ownership within ten years.

For business owners considering their own exit strategy, the Garrhs acquisition serves as a powerful example of how a successful transition can reward owners, preserve their legacy, and empower their employees for a prosperous future. This holistic approach aligns business, personal, and financial goals, ensuring a fulfilling exit.

Take the First Step Towards Your Legacy

The data from various reports, including the Colorado State of Owner Readiness Report, highlight that many business owners are ill-prepared for exit and have spent minimal time on their exit strategy. This underscores the urgent need for proactive planning.

If you are a home services business owner looking for a way to create a lasting legacy and empower your employees, we invite you to explore the possibilities of employee ownership. Contact us for a complimentary consultation to see how an ESOP might be the right choice for your business transition.