Brad Jacobs on His Big Bet on Building Insulation

What It Covers

Brad Jacobs, CEO of QXO, explains the $17 billion merger with TopBuild, the largest insulation installer and distributor in North America. The deal creates the second-largest publicly traded building products distributor with $18 billion combined revenue, $2 billion EBITDA, and $300 million in projected synergies over five years.

Key Questions Answered

• •M&A Valuation Discipline: QXO paid 14.9x 2025 EBITDA pre-synergies and 11.8x post-synergies for TopBuild — below QXO's own trading multiple, making the deal immediately accretive to earnings per share. Acquiring below your own multiple is the core mechanism for earnings accretion in roll-up strategies, and overpaying is the single most destructive mistake acquirers make.
• •Due Diligence Process: Before finalizing any acquisition, Jacobs conducts two full days of in-person management interviews — roughly 90 minutes per executive — using a former CIA intelligence officer to assess credibility. Channel checks with shared customers and vendors precede these meetings, but face-to-face sessions with the full senior team remain non-negotiable regardless of deal size.
• •Synergy Sources in Distribution: In building products distribution, synergies come primarily from cross-selling (roofing contractors also need insulation, waterproofing, and lumber), technology upgrades including AI-powered CRM and warehouse management systems, and improved vendor pricing from greater purchasing scale — not from headcount reductions, which Jacobs explicitly rejects as a value creation strategy.
• •Mortgage Rates as the Key Demand Driver: Building products demand correlates more directly with mortgage rates than with tariffs or energy prices. The shift from 3% to 7.5% mortgage rates suppressed housing activity significantly; rates have since eased to roughly 6.5% but need further decline to meaningfully stimulate new construction volume and drive organic revenue growth across the sector.
• •AI for CEO Visibility: Jacobs uses AI note-taking tools across all company meetings to receive end-of-day summaries, sentiment analysis, and trend reports from operations throughout the business. This real-time visibility into a large, distributed organization — previously delayed by months — represents a structural productivity shift for senior leadership managing complex, multi-entity companies.