ElectroRep, R/B Sales Join with Forward Solutions

Summer is seemingly less busy for acquisitions. During Q2 we had eight distributor acquisitions. Last month Graybar acquired Shepherd Electric and this month started with two independent electrical manufacturer representatives being acquired by a firm owned / backed by a private equity firm.

Osceola Capital Management backed Forward Solutions, which appears to be an aggregator of manufacturer representative organizations in a variety of industries, acquired Hiawatha, Iowa-based R/B Sales and Santa Ana, California-based ElectroRep.

46-year-old R/B Sales covers Iowa, western Missouri, Kansas and Nebraska. ElectroRep, celebrating its 63^rd year, covers the state of California.

From a line perspective, the two companies have a few lines in common … Eaton B-Line and Crouse Hinds, Southwire and HellermannTyton.

According to the press release:

“Forward Solutions, a leading player in outsourced marketing and sales, is thrilled to announce two significant mergers that will expand its operations and pave the way for strategic growth in the electrical channel. These mergers will bring together the established ElectroRep Inc. and R/B Sales Corporation, combining their expertise, resources, and customer bases within Forward Solutions.

ElectroRep Inc., a trusted name since 1960, has successfully served customers in California and Northern Nevada, generating exceptional opportunities through demand creation for the manufacturers they represent. Their commitment to excellence and customer-centric approach has enabled them to build a strong reputation in the industry. R/B Sales Corporation, operating since 1977, has been a driving force in Kansas, Missouri, Iowa, and Nebraska, with an unwavering focus on establishing deep relationships with national end users and providing unparalleled customer service support.

The strategic merger with both ElectroRep and R/B Sales is a natural fit that leverages each company’s respective strengths, expanding Forward Solutions’ sales expertise and enhancing its ability to serve a broader customer base. By combining the data-driven systems of ElectroRep with the national end user relationships of R/B Sales, the new electrical division will bring a holistic approach to serving electrical distributors, OEMs, MROs, electrical contractors, specifying engineers, and other end users.

President / CEO of Forward Solutions, Joe Orednick, expressed great enthusiasm about the mergers, stating, “We are thrilled to welcome ElectroRep and R/B Sales into the Forward Solutions portfolio. These mergers mark the beginning of a new era as we strategically invest in the electrical channel. Additionally, it positions us to unlock immense potential, drive sustainable growth, and deliver unparalleled value to our customers through insights and data.”

Kelly Boyd, CEO and President of ElectroRep, expressed excitement about the collaboration, stating, “Joining forces with Forward Solutions marks another thrilling milestone for ElectroRep. We were impressed by Forward Solutions remarkable track record in uniting multiple mergers seamlessly, making this partnership highly enticing. By combining our culture and investments with Forward Solutions resources, we have the catalyst to deliver diverse and unique solutions that address evolving trends in the Electrical market. This merger allows ElectroRep to maintain local strategies while implementing broader initiatives and enhancing specialization where needed. We are proud to be Forward Solutions first step into the electrical channel, unlocking compelling opportunities for our employees, customers, and the manufacturers we represent.”

President of R/B Sales, Bill Devereaux, echoed this sentiment, emphasizing the value that the merger will bring to customers. “We are excited to join Forward Solutions and become part of their growth strategy. Our unwavering commitment to growing sales, marketing, and service aligns seamlessly with Forward Solutions vision. Together, we will deliver exceptional experiences to electrical distributors, contractors, and other end users across the region.”

The newly formed division will operate under the Forward Solutions umbrella while retaining the individual expertise, relationships, and strengths of ElectroRep and R/B Sales. Customers can expect business operations to continue without disruption. The capabilities of each business will be further enhanced to provide support that is both more comprehensive and personal in their established territories.”

Kelly Boyd, CEO & President of ElectroRep commented, “We are excited to put a product on the field that looks a little different than the historical model for Reps.  It’s exciting for our two companies and for our new Partners in Forward Solutions to be the first in the Electrical market with a model that can provide the opportunity for reps to scale and have the professional resources larger channel and manufacturers want us to have.”

Congratulations to Kelly and Bill on a creative exit / investment strategy.

Additional Insights from Forward Solutions

From reading the press release, I had some questions which I asked of Gina Tsiropoulos, Vice President of Marketing for Forward Solutions, who graciously answered. Here’s the questions and her answers. Some provided some clarity and identify some of the opportunities:

Q.  The press release essentially states, “no change”. Are Kelly and Bill remaining with the agencies for the foreseeable future?

A.  Kelly and Bill are still the day-to-day leaders of their agencies in the markets their companies serve.  Kelly and Bill are also now owners in Forward Solutions, and will assist us in looking at the electrical division opportunities as they surface.

Q.  In the press release, one of R/B Sales’ strengths that is mentioned is “deep relationships with national end-users”. Given that the agency covers a 4-state area, what does this mean? Are they calling on end-users outside of their territory?

A.  RB’s deep relationships with national electrical contractors have been fostered over the last 15 years as large projects such as data centers, government airbase buildouts, along with hospital / university construction have attracted national electrical contractors into the 4 states RB Sales supports.  Currently several of the top 20 electrical contractors, in size, have electricians on jobsites in IA, NE, KS and MO, with some of them even opening local procurement and engineering offices.

Q.  Many of Forward Solutions’ customers, as referenced in Joe’s comment and presumably referring to the other agencies under the Forward Solutions umbrella, emanate from representing suppliers and products for other industries. Is a planned synergy creating cross-sell opportunities between agencies of different vertical markets?

A.  We believe that our model fosters stronger relationships at shared distributors and end-users providing insights from initial build to ongoing operations.  This, along with shared CRM contact information, does at times open additional doors where increased sales revenue is the outcome.

Q.  Many see some line synergy between ElectroRep and R/B (Eaton, Southwire, Tyton Hellerman) and presume that there is a plan for a national agency, possibly built around Eaton. How should suppliers who are not one of these three view the combination? Will the agencies seek to have supplier alignment across territories?

A.  We are focused on providing the very best LOCAL focus. Territory expansion may occur over time.

Q.  What is the profile of an electrical agency that Forward Solutions desires to attract?

A.  We look for a common culture, growth strategy, proven success, and history of investment in the business.

Q.  In viewing the Forward Solutions website, will the companies be listed separately, or will there be a new name for the Electrical Channel?

A.  We will launch a new divisional name in the future. For now we are focused on getting back to work, doing what we need to do to support the local markets.

Gina also shared some stats regarding Forward Solutions, which you can see on this infographic. The company now has 445 sales team members, 111 support service specialists and 22 regional offices.

Heard from the Street

As you’d suspect, I had conversations with a number of people … reps, manufacturers, and distributors who either had questions, observations or had solicited input from others. This included:

• Reportedly at least one of the major manufacturers had not been advised of the sale. According to a number of reps, their agreements have change of ownership clauses that require some level of notification with varying levels of advance notice with applicable confidentiality.
• Manufacturers have questions about control for decisions as well as access of the information.
• Questions about “who is Forward Solutions”, “what is the value that they bring”, “what is the value of the private equity firm in the deal.”
• The back-office and marketing benefits that are mentioned on Forward Solutions’ website were questioned as a “choice” that all reps can make, especially the marketing element, as it is an investment choice and many reps have invested into marketing with personnel, infrastructure and initiatives.
• Is this / will this be a play to create a national Eaton rep agency to perceptually be similar to JD Martin’s relationship with ABB for a non-gear offering?
• Other manufacturers who are represented on one linecard but not on another commented that they do not want to co-exist with competitors on a national linecard … or possibly with other acquisitions. (Much of this relates to concern about cross company information sharing, however, it is no different than what occurs with lighting agents or distributors.)
• Financially it was shared, by multiple sources, that it was a significant windfall for both principals (and hopefully their staffs.)
• “Seems like representation with an extra layer? Forward Solutions I suppose would help with some larger scale efforts (ie marketing, HR). Am I reading that correct?”
• “What are the advantages to a rep firm like ElectroRep, R/B Sales, or others?
• “Either you grow vertically by adding industries, horizontally through geographic expansion or merge that includes a group such as this.”
• “It’s a mistake in my opinion not to have communicated to at least key manufacturers if they plan to continue together.”

No input, to date, has been received from major distributors in those marketplaces. While there may be questions, as Gina infers, on a day-to-day basis, it’s business as usual. I’m sure there will be lots of conversations this week and throughout the month.

Some thoughts

• It is a very interesting, and creative, exit strategy and/or way to generate incremental investment funds for both ElectroRep and R/B Sales.
• Forward Solutions could potentially bring back-office synergies.
• Sharing best practices and “proceduralizing” some of them across the businesses could be helpful.
• There is a unique cross-sell opportunity between some of Forward Solutions’ other businesses and the new electrical division. Consider, their MRO division can introduce the electrical division to new contacts and vice versa. While conceivable, most companies find this becomes a longer-term objective as training salespeople takes time.
• The only way a national Eaton rep agency can take shape is with Eaton’s active support. Indications are that this has not been achieved / “blessed” at this time.
• Forward Solutions, or the reps, chose two well-placed agencies given these are areas with significant infrastructure investments that will be occurring in the next five years … Los Angeles has the 2028 Olympics, Kansas City has the World Cup in 2026 and the Midwest is a bastion for EV-related factories and data centers. These types of opportunities help generate the returns for Forward Solutions and Osceola, assuming they retain the lines (and perhaps add some as both agencies have pretty “limited” line cards which could be expanded, let alone they could expand into lighting via acquisition.
• The concept of an “electrical division” implies that additional acquisitions are planned. Reportedly other agencies were approached with the concept.
• Eaton agents may have had their business valuations, based upon “good will” increased as there is a potential acquirer for those businesses, presuming Eaton agrees or depending upon how the deal is structured.
• And the question about an agents succession plan? Seemingly irrelevant as presumably neither agency principal said at the last NEMRA meeting or in a planning session, “I’m planning on selling my agency, and oh, it’s to someone outside the industry that is backed by private equity.” Imagine the expression on the manufacturer attendees … dumbfounded!

Forward Solutions states that part of its value proposition is  being an “outsourced sales, marketing, customer support, and data analytics for manufacturers who want to grow their businesses more effectively.” Manufacturers will be looking to hear more about this as they evaluate the change in ownership.

Interestingly, or perhaps coincidentally, this value proposition is eerily similar to what NEMRA promotes in its Rep of the Future report and is overviewed in the 5 Pillars. Reps who focus on this can meet the same objectives. The only difference may be shared operational costs (i.e. HR, accounting / finance, etc … maybe some specialists.) If you haven’t seen the report and your firm is a member of NEMRA, contact NEMRA for a free copy (and here’s a link to the 5 Pillars.)

At the end of the day, a creative opportunity to potentially expand an agency(ies) capabilities, financial capabilities and improve support services. There is much that needs to be communicated to suppliers and then, if expansion of lines and other acquisitions are desired, to the broader manufacturing community. For distributors, not much change although they should ask “what more should I expect?”

Congratulations to Kelly, Bill and their teams.

What are your thoughts? (and feel free to send to me if you want me to post anonymously or you can do it yourself. Confidentiality will be respected.