The $800 billion building products industry in North America and Europe is expected to grow 5–9 percent in the coming years, but the sector has a secret: it’s broken at the point of distribution.
Most manufacturers don’t sell directly to the contractors who use their products. Instead, they rely on a patchwork of more than 7,000 local distributors across the U.S. These distributors, mostly small and privately owned, don’t have the resources to invest in modern logistics or national scale.
For contractors, that means products can be hard to find in certain markets, pricing isn’t consistent, and quality depends on who’s doing the distributing. A contractor in Ohio might have a totally different experience than one in Georgia, even if they’re buying the same product.
“This disconnect — strong demand on one side, an outdated distribution system on the other — has left a real gap in the market,” said Matt Lipman, Capstone’s CEO. “That’s the gap we’re here to close.”
A Platform That Controls Its Own Supply
Capstone’s Instone business already distributes in 31 states, giving it one of the widest footprints in the market. But what really sets Capstone apart is that it also controls many of the products it sells.
Most distributors act purely as middlemen. They buy from a range of manufacturers and resell to dealers. They don’t control product design, pricing, inventory quality, or availability — and when supply chains tighten, they’re often the first to feel the squeeze.
Capstone takes a different approach. Five of the eight brands it sells are either fully owned or covered by exclusive distribution agreements. Today, more than half of its product sales come from brands it owns or exclusively controls.
That control allows Capstone to set consistent pricing, manage inventory directly, and guarantee quality across markets. A contractor buying from Instone in Ohio will have the same experience as one in Georgia, a level of consistency that’s rare in this sector.
How Capstone’s Platform Creates Operating Leverage
It’s easy to see how this model benefits contractors: consistency, availability, fewer headaches. But the value flows back to Capstone, too.
When contractors and dealers know they can rely on a product, they keep coming back, making Capstone’s brands and platform stickier over time. And by owning many of its brands, Capstone has tighter control over its supply chain. That means it can manage inventory more efficiently, avoid disruptions, and respond quickly to market demand.
Ownership also lets Capstone set its own pricing, protect margins, and offer products dealers can’t get elsewhere. As the platform scales, those advantages compound. More negotiating power, stronger margins, and a more resilient business.
Capstone’s Advantage in a Fragmented Market
Capstone already has a portfolio of modern, nationally recognized brands, but it’s just getting started. The company is scaling its platform through targeted acquisitions that plug directly into its distribution network.
The industry’s history supports this approach: companies that make frequent, material acquisitions significantly outperform inactive peers in total shareholder returns.[1]
So does Capstone’s own track record. Each acquisition has helped deepen its regional presence, expand its warehouse network, and add new product lines that make the overall platform stronger.
With strong cash flow and a clear pipeline of potential targets, Capstone is well positioned to continue consolidating a highly fragmented industry, one acquisition at a time.
The company will be sharing more on this strategy soon. In the meantime, explore the latest investor deck to learn more about the brands under Capstone’s umbrella and what’s coming next.
[1] Bain & Company Global M&A Report 2024