The Next Phase of Acquisitions?

\"AuburnAt the NAED Annual meeting I asked distributors, manufacturers and others who typically hear about mergers / acquisitions what they were hearing.  Not so much about specific companies but more in general … were they hearing of activity.  All said that \”the market\” was quiet and a few shared that the one of the marketing groups was being a little more \”proactive\” in trying to recommend potential buyers within the group if a member of the group was interested in selling.  This is to be expected as it\’s nice to \”keep the revenue in the family (group)\” and has been a goal of groups for awhile.
So, with a quiet market comes what could be an indication of the next phase of acquisitions.
While most business are available for \”a price\”, many of the \”acquirable\” mid-sized ($100-300M) companies have been acquired. Now comes a strategic expansion connecting two companies that many may not recognize – Power-Flo Technologies and Auburn Armature.
So, who are they?
Power-Flo Technologies is a family-owned \”holding company\” comprised of eleven companies

  • The companies are in the electrical and plumbing industry.
  • The electrical side has expertise in the automation sector, strong engineering background and is into switchgear and motor controls
  • A key line is Siemens\’ Automation group (and at least divisions of ABB)
  • Power-Flo also owns United Electric Power
  • The company employs, according to a video on its website, about 150 people
  • And is located in, and serves, NYC / Long Island
  • And is an IMARK distributor

Auburn Armature is in northern NY with 6 locations

  • Serves the commercial, residential and industrial markets
  • Is a Siemens Technology Distributor
  • Has 119 employees
  • Had a private equity owner who was seeking to exit the investment after purchasing a majority of the business in 2013 for $7 million which included $3.4 million from the NY pension fund
  • Is / was an IMARK distributor.

The benefits become:

  • A strategic fit for Power-Flo Technologies / United Electric Power, enabling them to connect the \”three markets of New York\” (Long Island, NYC and upstate NY)
  • Combined the companies will have about 270 employees, making it overall a sizable company.
  • Appears to be a nice supplier fit
  • And, with both companies currently in IMARK, the revenue stays within the group.

And perhaps this becomes a model for the next round of acquisitions … small / mid-sized companies joining together to form a strategic fit, expand territory reach where, hopefully, 1 + 1 can equal 3 for most of the employees and the ownership.
There are other alternatives than \”the large acquirers\”.
 

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5 thoughts on “The Next Phase of Acquisitions?”

  1. I do believe there will be more of these. Companies buying others in contiguous space , not just geography but also product wise.

  2. In fall of 2015, Power-Flo completed the acquisition of Dittman & Greer covering New England, as well as Axis NJ which overlaps the NYC metro area. In January 2017, Power-Flo Automation was formed in upstate NY. All (3) of these entities are value-added AHTD houses with Siemens Automation as the major line. Thus, in addition to expanded geography, Power-Flo is also expanding the line card, scope of supply, and capabilities into the automation space. It is the largest Siemens Industrial distributor in the northeast and also has premier relationships with Rittal and Leuze Electronic throughout the entire region.

  3. Asset purchase/Bulk Sale leaves vendors in the dust. I hope there are no more of these “sales-mergers”! This is a really bad deal for everyone except the acquirer

  4. I believe it’s a good idea for marketing groups to be part of the matchmaking process. Here’s why. My experience dictates, most independents don’t have someone assigned to acquisitions. Either they are too small to support the effort, don’t know how to get started in the process or naive to the process of buying other organizations. Further,many who have purchased companies in the past bought “fixer-uppers” at bargain basement price and don’t know how to valuate or justify paying top dollar for a good company.
    Without this effort, the people cultivating acquisitions will be national chains and mega-regional players. The marketing group provides a service not only to the buy and seller but also to the employees of the organization who generally would prefer to work for a healthy independent.
    Kudo’s to the marketing groups for stepping up to the plate.

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