By Riki Markowitz
At the end of April, the Klein Companies issued a press release announcing that owner and operator Steve Klein was going to be semi-retiring after running the Texas-based custom home building company for 12 years. While Klein has been contemplating the complexities of retirement for some time, practically out of nowhere all the pieces fell perfectly into place.
It was just about a month into 2018 when Klein was approached by three different companies interested in making a deal to acquire Steve Klein Custom Builder assets. After initial confidential talks and due diligence, Klein felt that Carothers Executive Homes was the best fit. “Carothers Executive Homes’ culture and commitment to a higher level of personal attention was extremely close to my business philosophy,” says Klein. “Not only is it a terrific fit for my investments, but also, it’s a wonderful continuation for my team members.”
It’s almost as if Klein was born to build homes. He recalls that as a kid he was always interested in building and he grew up around and was eventually employed by utility, carpentry, and excavation industries. As a recent high school graduate in 1981, Klein started “swinging a hammer for $4 an hour.” But then the oil bust hit Texas particularly hard and about a year later Klein lost his job operating heavy equipment. So he went back to “swinging a hammer,” but this time, for the homebuilding industry. For the next 39 years, Klein would work on and develop an eclectic range of projects. Most of his more notable achievements were performed under the Steve Klein Custom Builder shingle.
Klein luxury homes reside in Georgetown, Leander, Liberty Hill, Round Rock and Victoria. Trademarks of Steven Klein Custom Builder are attention to detail and personal attention paid to each client. To ensure the quality of each home, Klein hand-selected craftsmen and suppliers and was committed to working with the same team of reliably talented builders.
In mid April, most of Steve Klein Custom Builder assets were officially transferred to the portfolio belonging to Carothers Executive Homes, including a luxury golf course, private ranches, plans for townhomes and mature living communities. Carothers also acquired properties part of the Klein Build on Your Lot program and plans in the affordable, starter-home and move-up markets.
Klein didn’t specifically choose this year to sell his assets. In fact, retiring, or in Klein’s case, semi-retiring, from running a homebuilding business can be turbulent and unpredictable. When RealtyLine spoke with Klein, he explained that his peers might find his story awe inspiring, even if the end did come unexpectedly. Scaling down this type of business rarely goes very smoothly, due to what Klein calls “all of the moving parts.” Winding down operations can drag on for years. A builder can’t just disappear on his or her customers, projects need to be built or sold and warranties need to be upheld. Even Klein is not shy to admit that over the years he’s worried how his inevitable retirement would play out. Could he find a buyer for his assets? Would he have to dissolve his team? How far in advance would he begin to scale back on ordinary day-to-day operations? How would he take care of his customers when he’s not working full-time hours?
In Jason Carothers, Klein found a peer cut from the same cloth. They ran their businesses and treated customers and employees almost the same way. Carothers, a fourth generation homebuilder, is the perfect partner for this deal, says Klein. “He’s 46 and I’m 58. He wants to expand and I want to downsize.”
Carothers Executive Homes, based in Belton, Texas, builds more than 100 homes annually ($40 MM) and has seven communities — in Temple, Belton, Salado and Georgetown. Acquiring Klein’s holdings will mark Carothers’ introduction into the Liberty Hill and Leander markets.
Carothers also has a pretty impressive list of credentials. He is a past president of the Temple Area Builders Association (TABA) and Central Texas Home Builders Association (CTHBA). He was a two-time TABA Builder of the Year winner and also Presidents Award of Excellence recipient. He served two multi-year terms on CTHBA board of directors, plus multiple other posts, including those with the city of Temple and Belton ISD.
To grow your business, you have to grow in other areas, too. The deal with Klein allows Carothers to expand his stock, customers and land holdings — literally overnight. It’s only because Carothers is also inheriting the Klein team (and a semi-retired Klein, too) that the Carothers crew will enjoy a calm and orderly transition.
For the remainder of 2018, Klein will complete his pre-sold homes and he’ll sell and close his retail spec inventory. He then plans to continue working with Carothers Executive Homes out of his Victoria office, run his Landmark Residential LLC and service his customers.
For 40 years, Klein has been working six days a week. He says that he’s “interested in finding a way to slow down,” but is adamant that this is not a retirement celebration. Nonetheless, Klein is very optimistic about this new chapter in his life. No more Saturday and Sunday meetings with customers and missing family events. “Now I have a way to downsize, slow down and devote more time to my children and grandchildren. This is a beautiful ending to a beautiful story.” RL