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I'm keen to understand the rationale behind growing by acquiring other players versus organically in the building product distribution space.

M&A allowed us to enter an established market quickly by acquiring an established distributor and revenue stream faster than we could organically. Typically, a greenfield location would take two to three years to become profitable. If moving into an adjacent market or expanding within an existing market, we could achieve profitability faster. M&A involved acquiring profitable companies where we could create synergies and drive revenue and accretive EBITDA to the bottom line.

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This leads me to a follow-up question. Larger distributors offer better prices due to economies of scale. Why is this industry still fragmented? Why do small distributors survive without the scale and economies of larger ones?

Beacon was a publicly traded company, and we had to continue to show growth year over year. We had investors to really perform for. Whereas a small distributor, maybe it's a family that owns the business, they don't have that investor base to report to. They can determine how much they want to make. It's a lifestyle choice, how they want to live. They can get by with making a lower margin because they're okay with not showing as high a profit.

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