Closing Out 2012 With Many Acquisitions

2012 ended with, as expected, a number of acquisitions, however, they weren’t the deals that everyone expected.

Earlier in the fall there was much discussion amongst larger independents and national chains and many expected a number of bigger ($100M+) deals to be closed.

Instead, a number of small, and smaller, deals were closed – and some using a little different funding methodology.  The deals were, for the most part, focused in the Northeast and MidAtlantic.

In no particular order – 

• NESCO, in the Boston area, acquired Laconia Electric which was headquartered in northern New Hampshire.  Both are IMARK distributors.  Others were also interested in Laconia, however, Laconia held out for the best financial deal.
• Granite City Electric, again in Boston, acquired Major Electric, which was headquartered in Rhode Island and had a few locations in Connecticut.
• Dominion Electric (DC) acquired a small distributor, YES
• United Electric, based in Delaware but also with locations in PA, MD and DC, acquired Ealer Electric, a small distributor in the Philly area
• Richmond Electric, located in Richmond, VA, was sold but remains private and independent.  It’s recently hired CEO acquired the company with financial support from a private equity firm called Matrix Capital Markets Group.
• As previously mentioned, Lloyd Graves Company, in Houston, was acquired by WinWholesale, again, a different financial model than a typical sale as each local company has a component of ownership that is local (i.e. the store manager).

Some thoughts:

We have from a few good sources that

• at least one of these deals went for 35% of revenues
• at least one was an asset based sales and that there was nominal goodwill (which is not unusual for small distributors).

In some instances this was about lack of succession, in others it was the foresight of a challenging economy.

The takeaways

• The 90-100% of sales deals are probably not available for 99% of distributors.  The 1% are platform companies that national chains want.
• Smaller companies are concerned about the market outlook.
• While there was lots of talk, there were few deals of “sell and walk away”.