Acquisition Alert #23: Green Mountain Acquires Generation

Green Mountain Electric Supply, a leading northern New England and western New York electrical distributor, announced the acquisition of Generation Electric Supply and Lighting. Generation, a single-branch operation, is located in Syracuse, NY.

The company was a minority-owned distributor and has a 3600 sq’ lighting showroom with a focus on serving “homeowners, home builders and contractors alike.”

According to a posting on Mohawk Valley Business Women’s Network, the company was closing either its showroom or planning for a business shutdown according to a 50% off sale, hence GMES may have made an asset acquisition given that GES was seeking to reduce its inventory.

Green Mountain now has 24 locations in New Hampshire, Vermont, New York and Pennsylvania and has completed a number of single location acquisitions in the past year along with building a central distribution center. The company is positioned for continued growth and reportedly has plans for additional small distributor acquisitions in its targeted geographical area.

Some of its acquisitions include:

• Falcone Electric and Fingerlakes Electric Supply, as mentioned in ElectricalTrends a couple of months ago
• Dunn Electric and Jamestown Electric in late 2021.

The roll-up approach has some interesting benefits:

• It provides small distributors with a viable exit strategy, even if for nominal dollars, and a path for continued employment for staff.
• GMES generates incremental sales and the potential to grow in new markets.
• The incremental, inherited, sales have good net profit potential as there GMES buys better than the smaller companies, can leverage IT and operational expenses and spread other fixed costs over a broader footprint and revenue base.
• Further, there may be some “diamond in the rough” customers in these markets … and possibly contractors served by these companies, that GMES can support through enhanced services.
• Additionally, frequently small distributors in remote markets have higher gross margins.

Prior to Green Mountain Electric Supply’s expansion and acquisition spree, the northern New England market was more the purview of New England distributors (CED’s Yankee division, Granite City, Northeast Electric (a division of Sonepar), a little Rexel, Standard Electric (a USESI company)) whereas upstate and western NY was dominated by small distributors. Green Mountain may have found a profitable niche.