Podcast Summary: Building Wealth Through Private Equity in Home Services

Podcast: The Home Service Expert Podcast
Host: Tommy Mello
Guests: Richard Lewis (Founder & CEO, Redwood Services), Adam Hanover (Co-founder, Union Main Group; Chairman, Redwood Services)
Date: December 22, 2025

Episode Overview

This episode dives deep into building generational wealth by leveraging private equity in the home services sector. Tommy Mello welcomes Richard Lewis and Adam Hanover, the driving forces behind Redwood Services, a company that has rapidly scaled to over $600 million in annual revenue by partnering with home service business owners—while prioritizing culture, people, and sustainable growth. They explore how to successfully merge investment strategies and operational excellence, debunk myths about private equity, and share actionable advice for entrepreneurs considering partnership or investment.

Key Discussion Points and Insights

1. Origins: From Wall Street to Home Services

• Richard Lewis's Journey

  • Left Wall Street and ServiceMaster due to dissatisfaction with bureaucracy and a desire for real impact.
  • Witnessed the destructive effect of “rebrand and replace” M&A in ServiceMaster's pest control acquisitions.
  • Sought a better model: “There has to be a better way to invest in this industry... than to do it the way these big corporations are almost forced to do it.” (Richard Lewis, 06:20)
  • Approached Adam Hanover and his family to back his vision, leading to Redwood’s founding.

• Adam Hanover’s Background

  • Trained at The Carlyle Group; observed pitfalls in traditional PE.
  • Founded Union Main Group with a 'build to hold' philosophy—“We build to hold as opposed to we build to sell.” (Adam Hanover, 10:43)
  • Emphasizes relentless focus on culture, talent, and long-term asset value.

2. Redwood’s Unique "People-First" Private Equity Model

• Ownership & Partnership Structure:

  • Redwood doesn’t “buy” businesses; it partners, typically acquiring 75% while owners retain 25% direct equity (not parent company shares).
  • No artificial ceilings: “If Redwood gets X multiple... we're going to share that all the way down to the partner level.” (Adam Hanover, 39:28)
  • This model has created over 30 millionaires from partners.

• Culture Preservation & Growth Focus:

  • Redwood maintains partners' brands, teams, and systems. No forced rebranding or centralization like traditional PE roll-ups.
  • “Our job has not been to replace people... Our job has been to help continue to develop and challenge the leadership we have locally and then scaffold around those leaders.” (Richard Lewis, 36:16)

3. Build to Hold vs. Build to Sell in Private Equity

• Long-Term Decision Making:
  • Focus on investing for growth, not just near-term EBITDA boosts.
  • Example: Right Way (a Redwood partner) grew from $30M to $90M in revenue after initial short-term EBITDA decline to invest in people and systems.
    • “In a traditional private equity build to sell model, that never would have happened...” (Richard Lewis, 13:18)
• Operational Excellence:
  • Every partner has local control: local call centers, HR, payroll, and P&L management.
  • Central support center helps with data and best practices, but doesn’t micromanage.

4. Metrics, Margins & Sustainable Success

• Healthy Profitability Benchmarks:

  • John Conway’s model: “50/35/15” (50% gross margin, 35% OPEX, 15% bottom) now shifted up due to efficiencies (aiming for close to 20% EBITDA margins).
  • “The long-term, sustainable, healthy EBITDA margin for a business in our industry is, is roughly 20.” (Richard Lewis, 26:59)

• Capacity Planning & Performance Tracking:

  • Use robust KPIs and benchmarking across 19 portfolio companies (booking rate, conversion, cancellation, etc.).
  • Created calculators for partners to model the impact of operational improvements without additional marketing.

• Talent & Leadership Development:

  • Relentless commitment to A-player hiring, with top executives personally sourcing candidates on LinkedIn.

5. Economies of Scale & Decentralization

• Deliberate Trade-Offs:
  • Willing to sacrifice some economies of scale to preserve entrepreneurial spirit, local culture, and customer experience.
    • “You are taking away a lever from a local manager... By doing that, you are sucking the entrepreneurial spirit out of a business.” (Richard Lewis, 23:02)
  • Technology centralization (e.g., call centers) avoided unless clearly beneficial for customers and team.

6. Technology & AI in Home Services

• Early Adoption with Caution:
  • Industry has long embraced technology but cautious on customer-facing AI until proven.
  • “My team is too... stubborn. On the calls that come in, that's gold. When a customer calls you in a time of need, we have no choice but to be excellent.” (Richard Lewis, 48:22)
  • Open to AI in non-customer-facing roles and operational improvements, but always protecting customer experience.

7. Wealth Building & Fairness in Private Equity

• Generational Wealth Creation:
  • Redwood’s model: partners can make as much or more on their retained equity as their initial buyout.
  • Profits interest and co-investment minority equity available to leadership and management, not just founders.
    • “If you’re a partner and you were with us for greater than three years, you made at least as much on your 25 remaining interest as you did on your selling your 75%...or more.” (Adam Hanover, 39:55)

8. Private Equity's Reputation: Debunking the Boogeyman

• Not All PE Is the Same:
  • Bad reputation comes from cost-cutting, short-term focused PE—not universal.
  • “Saying private equity is bad is like saying all car mechanics are thieves. It's just not true.” (Richard Lewis, 55:17)
  • Focus should be on partnering with the right individual investors and deal teams, not just firm brands.

9. Reflections & Lessons Learned

• Looking Back: Mistakes & Advice
  • Adam: Wish he’d been more patient and prioritized relationship-building and execution step-by-step.
    • “Be really, really patient and thoughtful about the way you're treating the people...” (Adam Hanover, 42:55)
  • Richard: Wishes he took his entrepreneurial leap sooner, but recognizes timing and preparation were crucial.

10. Books and Intellectual Inspiration

• Adam Hanover:
  • High Output Management (Andy Grove): Operations, process, and scaling lessons.
  • The Hard Thing About Hard Things (Ben Horowitz)
  • Built to Last (Jim Collins)
• Richard Lewis:
  • The Ride of a Lifetime (Bob Iger): Leadership and M&A/culture integration lessons, revisited annually.
  • Sports leadership influence: Particularly Nick Saban’s “Follow the Process.”

Notable Quotes & Memorable Moments

• On People-First Investing:

  • “I am not arrogant enough to think that I could buy the best business in Tucson, Arizona and somehow run it better than Rick Walter and Chris Sundin... But what I can do is help a $30 million business go to $90 million...” – Richard Lewis, 24:44

• On Building Millionaires:

  • “I make millionaires for a living.” – (Tommy Mello, 39:41; repeated by Adam Hanover, 39:43)

• On Private Equity’s Bad Rap:

  • “Saying private equity is bad is like saying all car mechanics are thieves. It's just not true.” – Richard Lewis, 55:17

• On Ownership and Upside:

  • “We did not cap you on the upside... We made sure to share that upside day one because our view is they're doing the work alongside us.” – Adam Hanover, 39:07

• On Key Partner Questions:

  • “In the first 10 minutes, if these partners are not asking how we treat the people and the legacy and the brand, we're almost certain... it's probably not a partner for us.” – Adam Hanover, 60:26

Timestamps for Key Segments

• [04:04] Richard Lewis’s founding story and key motivations
• [08:28] Adam Hanover’s private equity background and “build to hold” thesis
• [13:00] Differentiating build-to-own vs. build-to-sell
• [19:07] Partnership structure: 75% buy-in, 25% retained equity
• [22:40] Culture vs. economies of scale: local autonomy over centralization
• [25:52] Sustainable margin benchmarks in HVAC/plumbing/electrical
• [32:22] A deep dive on KPIs, marketing, and operational improvement
• [35:22] Leadership, hiring, and compensating A-players
• [39:59] The millionaires made through Redwood’s partnership model
• [44:46] Adam & Richard’s biggest lessons and mistakes in their journeys
• [48:12] AI & technology adoption: when and how to implement
• [55:11] Why does private equity have a bad name?
• [60:26] Best partner questions and cultural fit
• [61:42] Book recommendations and intellectual influences
• [66:57] How to reach out to Richard and Adam
• [71:17] Closing thoughts: selling alternatives and generational wealth creation

How to Connect

• Richard Lewis: Visit redwoodservices.com; contact info and LinkedIn for all team members.
• Adam Hanover: Find on redwoodservices.com team page or email adam@unionmain.us; open to LinkedIn connections.

Final Thoughts

Richard Lewis closes by reminding contractors:

“There’s not one path to selling your business… There are ways to get liquidity, still run your business, still have fun, and then create generational wealth on your second bite.” (Richard Lewis, 71:17)

Adam Hanover echoes the value of partnership, relationships, and invites entrepreneurs to engage and learn more about their people-first, custom-tailored alternative to traditional private equity.