News of another home building sale or merger can be viewed skeptically, but in the comparatively strong Carolinas market the union of The Mungo Cos. with 1st American just makes sense.
Mungo, the largest builder in South Carolina with 683 closings in 2006, is flat this year and needed an opportunity to expand its footprint.
Raleigh, N.C.-based 1st American, which expects to close about 100 homes this year, down from 140 the year before, is the classic example of a company that either has to invest tens of thousands in new technology systems-or find a partner.
The deal, which is potentially worth $20 million, was announced late last week.
"I felt I was a one-man operation, and it was time for me to take the business to the next level," said Michael Dean Chadwick, CEO of 1st American, who plans to stay on for at least three years.
"Mungo is the largest builder in South Carolina, and we share many of the same core values, so I thought they were in a strong position to invest in my company," he said.
Chadwick said the home builder will operate as a division of The Mungo Cos. and will move forward under the 1st American brand.
"I think he made a wise choice," said Steven Mungo, CEO of The Mungo Cos.
"When a company reaches a certain point they either have to invest or marry up with someone," explained Mungo, pointing out that he expects all four of Mungo's divisions to be up and running on Mark Systems' Integrated Homebuilder Management System by the first few months of 2008.
Mungo does business in Charleston and Myrtle Beach as Harbor Homes and builds under the Mungo Homes brand in the Greenville-Spartanburg area and in Columbia, the location of its corporate headquarters.
The company has also had success with Mungo Construction, which works with community development corporations and public housing authorities on affordable housing projects. 1st American will be its fourth division and first foray into North Carolina.
Learn more about markets featured in this article: Charleston, SC.