What to expect from the Gustave A. Larson and Williams Distributing Co. HVACR acquisition news

Over 1,000 HVACR distributor associates will have new names on the bottom of their paychecks soon. What do the acquisitions mean for the HVACR channel and your distributor and manufacturer business?

In the last week two big HVACR channel acquisitions were announced. Gustave A. Larson with 500+ employees across their 54 locations joined Hajoca. Williams Distribution Co. with 575 employers and 32 locations joined Daikin Comfort Technologies.

That news has some potentially interesting outcomes, so let’s take a deeper look beyond the headlines and press releases.

Hajoca & Gustave A. Larson (GAL)/Applied Product Solutions (APS)–

The Larson family announced that they entered a partnership in which Hajoca takes a majority ownership. Larson and APS will continue to operate as a separate, combined entity with their current leadership under Hajoca. Hajoca has a history of letting their acquisitions/partnerships operate more as independent business units.

In what this change might mean to the channel, I always like to look at history for a guide. This is not Hajoca’s first rodeo when it comes to acquisitions.

I wanted take a look back at one of Hajoca’s previous historical acquisitions to give us a guide on potential outcomes and storylines. I chose the Hajoca- HD Supply acquisition to take a deep historical dive since as a sale from a publicly owned to a private company there is more information available to research, and it’s an acquisition I have personal experience with.

In the full disclosure category – I was part of the HD Supply Companies when they sold their Plumbing and PVF distribution businesses to Hajoca in 2011, and I have some personal direct observer experience that adds some context for consideration.

If you were in distribution in the early 2000’s you probably remember when Home Depot started buying large B2B distributors and shaking up the channels. In 2006 they started HD Supply acquiring the Hughes Supply Electrical, Plumbing, HVAC behemoth of the Southeast in 2006 for an astounding $3.67B (including debt).

Somewhere along the way in that journey, HD Supply eliminated the Hughes Supply name and put their acquisitions under a unifying HD Supply Banner. As an interested observer who had close friends now joining the new Hajoca team, in my opinion Hajoca made some very smart decisions with their new acquisition immediately. One of the first things they did was rebrand that HD Supply division under the old Hughes Supply Banner.

The Hughes Supply brand had a lot of equity. If you were a builder, contractor, or a resident in Florida before 2006 you saw trucks, buildings, and more with the Hughes Supply name everywhere. It was brand that was highly recognizable in the markets they served.

So, why is that Hughes Supply story important to understand what the new Hajoca and GAL/APS combination will look like and mean to the market. First, it means they almost certainly keep the GAL and APS brands. The GAL brand has value and equity.

The history of Hajoca and Blackfriars Corporation the holding company that Hajoca is part of, is to let the companies they acquire retain their brand and local business approach.

The messaging to end customers and suppliers will most likely be that any changes from Family ownership to Hajoca will be minimal. It’s likely that the logos on the building, T-shirts, and the trucks will remain the same. The initial changes will likely be more like a pebble in the pond impact to use an analogy, but ownership changes do always have some long and short-term impacts on the market. 

Williams Distributing Co/Daikin Comfort Technologies-

The Daikin acquisition of Williams Distributing acquisition is another in a long line of interesting Manufacturer-Distributor combinations and evolution in the HVACR Channel.

The manufacturer to distributor channel implications here are very apparent. Daikin has expanded their end-to-end delivery system for their products to their end user customers in Williams markets.

“Williams has long been an important, successful partner for Daikin, Daikin Applied, Goodman and Amana® brand HVAC products. The acquisition of this outstanding distributor is another significant step on our path to make Daikin the #1 indoor comfort solutions provider in North America.”  said Takayuki Inoue, Executive Vice President and Chief Sales and Marketing Officer for Daikin in the press release.

To the end customer contractor having the ability to communicate a product or delivery issue to the same company can be and probably is appealing.  I predict this growth of Manufacturer – Distributor companies is going to continue to grow in HVACR and across all B2B Industrial and Construction Channels.

Distributors are going to continue to drift into assembly and services that are manufacturer like, and major manufacturers want more control of the distribution channel. This what I term ManuDisty or DistyManu type of company evolution is here to stay and probably will keep expanding.

What do these two acquisitions/mergers mean to you as a manufacturer or distributor?

As a manufacturer supplier – if GAL or Williams is a customer you need to stay close and overcommunicate with your local and corporate GAL and WIlliams teams. You need to understand how you can additive during the change, and not lose touch with the current and future decision makers.

When a transaction like this happens leadership changes tend to occur at faster rates. That leader who may have had a plan to work 2-3 more years may move up the timetable to now, an employee who may be unsure what their future now looks like may move to another company, and so on.

Acquisitions almost always lead to more associate turnover at faster rates. As a manufacturer or manufacturer rep you need to make sure all your business isn’t tied to that one good friend who is now retiring earlier than anticipated. I would recommend you make sure your team is building relationships at all levels, and ensure you don’t have all your eggs in one basket.

I’ve personally been promoted at B2B distributors when a selling event happens, because someone has left the company. When I was learning the new job, I naturally leaned on those suppliers and relationships I had prior to getting the new role.

Did that result in probably more share, sales, and business for those manufacturers who I had relationships with? I am sure it did.

If you are a distribution competitor of GAL or Williams these events may cause a Manufacturer Rep or Manufacturer to reach out to have a conversation on an expanded partnership or opportunity. The changes often cause a manufacturer to move up their “what I would do if XYZ distributor sold risk planning/thoughts” into action.

If you can position your distribution business as that first call or discussion it can be big. The same rules of communicating your willingness to talk manufacturers can improve your relationship and grow business. This “we are here to help approach” can be very impactful in this ever-evolving acquisition world.

As always, we would love to get your feedback, so please feel free to comment below or reach out to me directly at john.gunderson@dorngroup.com

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