At 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\”.