After a comprehensive year-long search, Brad Jacobs has announced
his intention to create a market leader in building products
distribution — an industry with approximately $800 billion in
annual revenue between North America and Europe, according to
industry estimates. The company will be called QXO, Inc.
“QXO’s strategy is to create a tech-forward leader in the
building products distribution industry through accretive M&A
and organic growth, including greenfield openings, with the goal of
generating outsized stockholder value,” Jacobs said. Jacobs will
become chairman and chief executive officer of QXO upon closing a
previously announced $1 billion cash investment into SilverSun
Technologies, Inc. After spinning off the existing SilverSun
business, the remaining company, QXO, will be a standalone platform
for significant acquisitions.
Distributors of building products offer materials, finished
goods, value-added solutions and expertise to a broad range of
customers across residential, nonresidential, industrial and
infrastructure end-markets. Their products are used in new
construction and in repair and remodeling. Key categories include
access control, construction supplies, doors and windows,
electrical components, fencing and decking, HVAC, infrastructure,
landscaping, lumber, plumbing, pools, roofing, siding and water,
among others.
“We expect to achieve a revenue run-rate of at least $1 billion
by the end of year one, at least $5 billion within three years, and
tens of billions of dollars over the next decade,” Jacobs said.
“QXO’s scale should elevate the customer experience, increase sales
force effectiveness and enable margin expansion.”
The industry’s nascent use of technology, particularly AI and
B2B e-commerce, represents a compelling opportunity for
tech-focused entrants. According to industry data, the percentage
of industry revenue derived from e-commerce is currently only
mid-single digits, and this share is expected to triple by 2030.
Additional types of tech adoption by distributors have the
potential to be transformative through price optimization, demand
forecasting, warehouse automation and robotics, automated inventory
management, route optimization for delivery fleets, supply chain
visibility, and end-to-end digital customer connectivity. QXO’s
strategy anticipates that these drivers, among others, will be
central to the company’s goal of outsized stockholder value
creation.
The building products distribution industry is highly
fragmented, with approximately 7,000 distributors in North America
and 13,000 in Europe, according to industry observers. The industry
has generated compound annual revenue growth of 7% over the last
five years, based on industry data, and continues to benefit from
powerful secular growth drivers for building products distribution
in the residential, nonresidential and infrastructure sectors.
For example, industry reports estimate that the current supply
of U.S. homes is 3 million units short of demand, potentially
creating long-term tailwinds for both new construction and the
repair and remodeling of aging homes. In the nonresidential sector,
long-term demand is expected to be driven by growth across multiple
industrial and commercial verticals, according to industry sources.
Infrastructure should benefit from the widely reported need for
repair or replacement of America's public transportation, utility
and communication systems, among others.
These market dynamics, together with the fragmented nature of
the industry, offer a significant opportunity to unlock growth
potential through scale and technology. National distributors can
serve large customers across multiple geographies and project types
with standardized efficiencies, providing consistent, data-driven
customer services across a broad operating scope. Additionally, a
scaled technology ecosystem can expand the array of value-added
services offered to customers, such as jobsite visibility into
product consumption, digital configuration tools for custom
ordering and tracking, and virtual design capabilities that
interface with product order flow.
Track record
Brad Jacobs has completed approximately 500 M&A transactions
in his career, and built five multibillion-dollar, publicly traded
companies to date: XPO, Inc. (NYSE: XPO), one of the largest
providers of less-than-truckload services in North America; GXO
Logistics, Inc. (NYSE: GXO), the largest pure-play contract
logistics provider in the world; RXO, Inc. (NYSE: RXO), a leading
tech-enabled freight brokerage platform; United Rentals, Inc.
(NYSE: URI), the world’s largest equipment rental company; and
United Waste Systems, Inc., the fifth largest U.S. waste management
company at the time of its sale.
Each of these companies has a history of attracting world-class
talent, establishing advantages through technology, and scaling up
through accretive capital allocations for M&A and organic
growth.
This decades-long track record should position QXO to acquire
exceptional businesses, integrate them effectively, improve margins
and generate high returns on capital.
The Investment Agreement
As previously announced, on December 3, 2023, Jacobs Private
Equity II, LLC (“JPE”), which is led by Brad Jacobs, and minority
co-investors entered into an investment agreement (the “Investment
Agreement”) with SilverSun Technologies, Inc. (Nasdaq: SSNT)
(“SilverSun” or the “Company”), pursuant to which JPE and the
minority co-investors will invest $1 billion in cash into
SilverSun. The proposed investment is comprised of $900 million by
JPE and $100 million by co-investors, including Sequoia
Heritage.
Upon the closing of the equity investment, JPE will become
SilverSun’s majority stockholder, Jacobs will become its chairman
and chief executive officer, and SilverSun will be renamed QXO. QXO
will become a standalone platform for Jacobs’ new venture following
the spin-off of the existing business to SilverSun stockholders as
of a record date that is expected to be one day prior to the
closing of the investment.
Cautionary statement regarding forward-looking
statements
This communication contains forward-looking statements.
Statements that are not historical facts, including statements
about beliefs or expectations, are forward-looking statements.
These statements are based on plans, estimates, expectations and
projections at the time the statements are made, and readers should
not place undue reliance on them. In some cases, readers can
identify forward-looking statements by the use of forward-looking
terms such as “may,” “will,” “should,” “expect,” “opportunity,”
“intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” “target,” “goal,” or “continue,” or the negative of
these terms or other comparable terms. Forward-looking statements
involve inherent risks and uncertainties and readers are cautioned
that a number of important factors could cause actual results to
differ materially from those contained in any such forward-looking
statements. Factors that could cause actual results to differ
materially from those described herein include, among others:
- uncertainties as to the completion of the equity investment,
the separation by SilverSun Technologies, Inc. (the “Company”) of
its existing business into SilverSun Technologies Holdings, Inc.
(the “spin-off”) and the other transactions contemplated by the
investment agreement by and among Jacobs Private Equity II, LLC,
the Company and the other parties thereto (the “Investment
Agreement”), including the risk that one or more of the
transactions may involve unexpected costs, liabilities or
delays;
- the risks associated with the Company’s relatively low public
float, which may result in its common stock experiencing
significant price volatility;
- the possibility that competing transaction proposals may be
made;
- the risks associated with raising additional equity or debt
capital from public or private markets to pursue acquisitions or
other strategic investments, including in an amount that may
significantly exceed the initial equity investment, and the effects
that raising such capital may have on the Company’s business and
the trading price of the Company’s common stock, including the
possibility of substantial dilution;
- the possibility that additional future financings may not be
available to the Company on acceptable terms or at all;
- the effects that the announcement, pendency or consummation of
the equity investment, the spin-off and the other transactions
contemplated by the Investment Agreement may have on the Company
and its current or future business and on the price of the
Company’s common stock;
- the possibility that an active, liquid trading market for the
Company’s common stock may not develop or, if developed, may not be
sustained;
- the possibility that the warrants, if issued, may not be
exercised;
- the possibility that various closing conditions for the equity
investment, the spin-off and the other transactions contemplated by
the Investment Agreement may not be satisfied or waived, or any
other required consents or approvals may not be obtained within the
expected timeframe, on the expected terms, or at all, including the
possibility that the Company may fail to obtain stockholder
approval for the transactions contemplated by the Investment
Agreement;
- the effects that a termination of the Investment Agreement may
have on the Company, including the risk that the price of the
Company’s common stock may decline significantly if the equity
investment is not completed;
- the risk that the spin-off may be more difficult,
time-consuming or costly than expected or the possibility that the
anticipated benefits of the spin-off may not be realized;
- uncertainties regarding the Company’s focus, strategic plans
and other management actions;
- the risk that the Company, following the closing of the equity
investment, is or becomes highly dependent on the continued
leadership of Jacobs as chairman and chief executive officer and
the possibility that the loss of Jacobs in these roles could have a
material adverse effect on the Company’s business, financial
condition and results of operations;
- the risk that Jacobs’ past performance may not be
representative of future results;
- the risk that the Company is unable to attract or retain
world-class talent;
- the risk that the Company may be unable to identify suitable
acquisition candidates or expeditiously consummate any particular
acquisition candidate on acceptable terms or at all;
- the risk that the failure to consummate an acquisition
expeditiously, or at all, could have a material adverse effect on
the Company’s business prospects, financial condition, results of
operations or the price of the Company’s common stock;
- the risk that the Company may fail to satisfy the ongoing
requirements of Nasdaq if it is unable to expeditiously consummate
an acquisition following the consummation of the spin-off;
- the risks associated with cybersecurity and technology,
including attempts by third parties to defeat the security measures
of the Company and its business partners, and the loss of
confidential information and other business disruptions;
- the possibility that new investors in any future financing
transactions could gain rights, preferences and privileges senior
to those of the Company’s existing stockholders;
- the risks associated with the uncertain nature of the building
products distribution industry in which Jacobs, upon becoming
chairman and chief executive officer of the Company, plans to
pursue acquisitions after consummation of the transactions
contemplated by the Investment Agreement;
- the possibility that industry demand may soften or shift
substantially due to the cyclicality and seasonality of the
building products distribution industry and its dependence on
general economic conditions, including inflation or deflation,
interest rates, consumer confidence, labor and supply shortages,
weather and commodity prices;
- the possibility that regional or global barriers to trade or a
global trade war could increase the cost of products in the
building products distribution industry, which could adversely
impact the competitiveness of such products and the financial
results of businesses in the industry;
- the risks associated with potential litigation related to the
transactions contemplated by the Investment Agreement or related to
any possible subsequent financing transactions or acquisitions or
investments;
- uncertainties regarding general economic, business,
competitive, legal, regulatory, tax and geopolitical conditions;
and
- other factors, including those set forth in the Company’s
filings with the U.S. Securities and Exchange Commission, including
its Annual Report on Form 10-K for the fiscal year ended December
31, 2022 and subsequent Quarterly Reports on Form 10-Q.
Forward-looking statements herein speak only as of the date each
statement is made. Neither the Company nor any person undertakes
any obligation to update any of these statements in light of new
information or future events, except to the extent required by
applicable law.
Additional information and where to find it
In connection with the proposed equity investment, the Company
will prepare a proxy statement to be filed with the U.S. Securities
and Exchange Commission (the “SEC”). When completed, a definitive
proxy statement and a form of proxy will be mailed to the
stockholders of the Company. THE COMPANY’S STOCKHOLDERS ARE URGED
TO READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTIONS
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. The Company’s
stockholders will be able to obtain, without charge, a copy of the
proxy statement (when available) and other relevant documents filed
with the SEC from the SEC’s website at http://www.sec.gov. The
Company’s stockholders will also be able to obtain, without charge,
a copy of the proxy statement and other relevant documents (when
available) from the Company’s website at
https://www.silversuntech.com or by written request to the Company
at 120 Eagle Rock Avenue, East Hanover, New Jersey 07936.
Participants in the solicitation
Jacobs Private Equity II, LLC and the Company and its directors
and officers may be deemed to be participants in the solicitation
of proxies from the Company’s stockholders with respect to the
proposed equity investment and the other transactions contemplated
by the Investment Agreement. Information about the Company’s
directors and executive officers and their ownership of the
Company’s common stock is set forth in the proxy statement for the
Company’s 2023 Annual Meeting of Stockholders, which was filed with
the SEC on November 27, 2023. The interests of the Company and its
directors and executive officers with regard to the proposed equity
investment may differ from the interests of the Company’s
stockholders generally, and stockholders may obtain additional
information by reading the proxy statement and other relevant
documents regarding the proposed equity investment and the other
transactions contemplated by the Investment Agreement, when filed
with the SEC.
Contacts for JPE:
InvestorsMark Manducamark.manduca@jpe.com
+1-203-321-3889www.qxo.com
MediaJoe Checklerjoe.checkler@jpe.com
+1-732-674-4871www.qxo.com
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