Border States Enters the Windy City

Border States, the electrical distribution industry’s largest employee-owned distributor, re-entered the acquisition market and entered the Chicago market. This is their first foray into the Windy City and is the largest metropolitan area that the company has entered.

According to a press release “Border States, a 100% employee-owned company, reached an agreement to purchase Advance Electrical Supply Co., an electrical wholesale supply leader in Chicago, Illinois. Advance has more than 100 employees serving the Chicago area market and will join Border States on Saturday, April 30. Advance Electrical Supply Co. is owned by Mike Mayworm, Executive Vice President, and Aaron Hughes, President.

“It’s been awesome to see the success Advance has achieved. We have an incredible group of people and being able to continue to grow at an even faster pace is thrilling,” said Mike Mayworm. “I couldn’t think of doing it with anyone else than Border States.”

“Mike and I are extremely excited to join Border States. We talk a lot about ‘acting like owners’ and to be able to give our team members the ability to be true owners is an incredible opportunity for them,” said Aaron Hughes. “Border States embodies what we wanted to become in the future. We are aligned on our values and the way we treat people. Joining Border States is going to accelerate our growth in the Chicago area and assist us in providing an even better customer experience.”

“We are excited to welcome Advance Electrical Supply Co. to our employee-owned company. They are a very successful and well-respected electrical distributor with an outstanding reputation,” said Jason Seger, President, Border States. “Their proven track record, Chicago presence and potential for growth makes them a perfect geographic addition. More importantly, their values and belief in strong customer service, strong vendor relationships and the desire for employee ownership align well with our culture.”

Advance has achieved double-digit revenue growth, on average, over the past five years with sales generated primarily in the construction market. They will join the East Region of Border States, forming the East North Central Area. Don Masters, Executive Vice President of the East Region, and James Sipe, Executive Vice President of Supply Chain, of Border States will lead the integration team.

“In acquisitions, we focus on the people, the leadership team and the culture. Advance has great talent throughout the organization and is managed by a progressive leadership team that has created high engagement and a winning culture — our two companies share similar values and approaches to success,” said David White, CEO, Border States. “We believe if you take care of each other, customers and vendors, the rest will take care of itself. This is a tremendous fit; we look forward to growing together.”

Observation

Based upon Border States’ history, the integration should be relatively “swift” and while Border States is in a number of major cities, as many know, the dynamics in Chicago are “different”. Other semi-national distributors have expanded into “tier 1” cities over time that have “different” ways of doing business and have been challenged, resulting in a significant loss of business (especially when they move into the East Coast). Hopefully, for Border’s sake, it will listen to the staff, learn the customer base, personally network with the local rep community and tailor its integration to the marketplace rather than corporate needs. But …

Both companies are Schneider / Square D distributors and, with the continued consolidation of the market, manufacturers need to continually evaluate the resources that they dedicate to chains vs nationals to ensure that they receive effective local visibility. Account-based marketing strategies will be key and national chains need to up their marketing game … nationally and locally. From a manufacturer perspective, and their agents, more emphasis on the end-user to influence brand preference will be important … unless distributors decide to invest to create demand rather than service demand.

Congratulations to the Advance ownership who monetized their investment in seven years (current owners bought the company in 2015 per the Advance website)

Last quarter there were four electrical distributor acquisitions. This starts the counter for this quarter. If we use Q1 as a base, that gives a projection of 16 for the year. Are you taking the “over” or the “under”?