Bruce Vann·April 6, 2023

How to Grow a Manufacturing Business | Bruce Vann Interview

Bruce Vann is a former finance professional based in the Hampton Roads / Richmond, Virginia area who acquired Lux Out Products — a stage curtain and drapery manufacturer in business since the 1940s — on February 14, 2020, just one month before COVID shut down stages nationwide. This is a follow-up episode recorded roughly three years into ownership. Despite the pandemic, Bruce kept the business profitable and has since expanded: he acquired Blinds and More, a window treatment retail dealer with ~$1m+ in revenue, using a stock sale through Lux Out, and he purchased a rare ribbon weight machine from a retiring competitor for under $300k (versus $1.5m+ replacement cost), creating a competitive moat and a new B2B revenue stream selling to competitor curtain companies. Bruce's central growth thesis is to roll up retiring owners of window treatment dealer stores — which tend to have low-to-mid six-figure EBITDA — to expand Lux Out's geographic installation footprint and reduce expensive travel for measuring and installing stage curtains. Key challenges include the long sales cycle (which slows iteration and creates feast-or-famine cash flow), a tight labor market, and a failed digital product build for the Shades line that cost significant money. Bruce is still actively operating both businesses and actively seeking more acquisitions in the window treatment dealer space.

Deal facts

revenue: ~$1m+ (Blinds and More); Lux Out not stated
financing structure: Stock sale for Lux Out acquisition of Blinds and More; ribbon weight machine purchased for under $300k
notes: Bruce describes getting 'a heck of a deal' on Lux Out. Blinds and More EBITDA stated as 'more than 100 less than 400' (likely $100k-$400k). Ribbon weight machine purchased for under $300k; replacement cost estimated north of $1.5m. Acquired Lux Out on February 14, 2020. Three businesses acquired from retirees total.

Why this business

Bruce was in a career rut after starting in finance and searched for about six to seven months. He chose Lux Out because he thought it was a durable business that had been around since the 1940s and operated in a nice niche. He valued its longevity and niche positioning.

What's working

Lux Out survived COVID despite stages being shut down for months, demonstrating the business's resilience
Profitability has been roughly maintained or exceeded initial projections since acquisition
Strong customer reviews and execution quality, driven by an excellent on-the-ground team including a great plant manager and workroom staff
Long sales cycle combined with upfront deposits provides favorable working capital dynamics (effectively a no-interest loan for months)
Acquisition of Blinds and More at a solid multiple, with synergies via routing custom drapery orders to Lux Out
Purchase of a rare ribbon weight machine for under $300k (replacement value over $1.5m), creating a competitive moat and new revenue stream selling to competitors
Roll-up thesis developing: buying retiring owners of window treatment dealers to expand geographic footprint and reduce travel costs for installation
Lux Out geographic reach already extends from South Carolina to Baltimore and into Florida and Texas

What's hard

Labor market has been extremely tight throughout the three years of ownership, making it difficult to attract and retain the right people
Long sales cycle makes it very difficult to detect secular changes or quickly iterate on business improvements
Digital product for the Lux Out Shades line has been extremely challenging to build; a vendor in New York defrauded Bruce and the previous owner out of a significant amount of money for a website that was never properly delivered
Feast-or-famine revenue pattern due to the long sales cycle and seasonality (everyone wants curtains installed before school starts)
No recurring revenue — stage curtains have a 20-year lifespan, making customer return frequency low
Ongoing operational distractions (e.g., sewage backup on a Friday) constantly pull attention away from strategic priorities
Difficulty knowing when to install an operator/GM because the role requires both operational and strategic judgment that not everyone possesses
Spouse hesitant about continued acquisitions, creating personal/family tension around growth ambitions

Notable quotes

I love the company dearly and I think it's done very well for me. What stands out in my mind are the ways that I would — the things that I want to improve — but still overall we've done fine. We've grown in the pandemic, we survived a time when nobody was on stages for several months.

The goal is not necessarily to make money. My goal is to manage well. I want the hand that I feel like I've been dealt — I want to play the hand really well. And if you have some cash and you're not using it, it's not going to work.

I think I should put it this way — I think I should, if someone wants to sell to me in the industry, we should have that conversation. But if someone else wanted to buy, there may be some room out there to have those conversations. I just don't know if they really understand the secret sauce of what makes Lux Out great.

I got the machine for less than 300. And it cost me a couple tens of thousands to move it. What that thing is replacing would be somewhere definitely north of one and a half million if I had to replace it. So I like to think I got a pretty good deal, and I've also kind of built a little bit of an economic moat around my business.