Distributor Acquisition: Eckart Supply Enters Atlanta Market

According to a distributor friend, the third electrical distributor acquisition of Q3 occurred earlier this month in Atlanta. And I was able to confirm it via social media.

Eckart Supply, an Indiana-based distributor that was ranked #110 in the latest Electrical Wholesaling Top 150, acquired Electrical Supplies Unlimited (ESU) of Buford, Georgia.

Eckart, an AD distributor, is a multi-discipline, nine location, distributor. The company’s revenues, according to Jim Lucy at Electrical Wholesaling as reported by Chad Coffman from Eckart, is that their 2022 electrical revenues were almost $200 million. This would have made them #62 on the EW Top 150.

ESU, founded in 2000 and located 30 miles north of Atlanta, is/was a single location distributor. The company’s revenues were in the $18-25 million range with sales supported by four outside salespeople. While multiple people made up the ownership group, majority ownership was concentrated in a few individuals. According to sources, there were “generational differences” within the ownership group and this may have led to the decision to sell the business.

Eckart acquired Chapman Electric, located in Noblesville, in June 2022 and Radcliff Electric Supply, located in Radcliff, Kentucky, in January 2021.

Over the past few years, we’ve also noticed that acquiring distributors and distribution equipment companies are seemingly aligning their interests. Eckart is an Eaton switchgear distributor. It is unknown whom ESU’s gear line is / was, or if they had one, however, sources tell us that ESU / Eckart will now be an Eaton house and that Norcross Electric, an IMARK member, which has two locations in the Atlanta area, will be losing the line. It was unknown which gear line Norcross will align with, but it is assumed to be either ABB or Siemens.

The acquisition announcement was on LinkedIn (this is the link from Eckart) and posted by both firms on Facebook (this is the link from ESU).

Congratulations to both companies.

Some thoughts

• So, we’re now at three distributor acquisitions so far this quarter (Shepherd, Sequel and ESU. One month left in the quarter.
• Recently I reviewed the June issue of Electrical Wholesaling, which is the Top 150 issue. It’s based upon distributors who had sales in 2022. After accounting for acquisitions and removing non-electrical distributors (so, utility distributors, master distributors such as Omni Cable, wire distributors, MRO distributors such as Grainger, Fastenal, and Motion Industries) and, lo and behold, we’re down to a Top 100 list. Jim Lucy will either need to rename the list or find more distributors (maybe add automation distributors?)
• Could the ESU acquisition begin the next acquisition trend? With the number of “significant” distributors declining, larger acquirers (national chains) may need to look to fill-ins, higher bidding for the few remaining “blue chips” if they are not already in a market or consider diversification efforts. The regional independents with succession in place (or younger ownership) may look for companies in the $10-25 million range and no succession as acquisitions. These companies may be able to invest into these companies with “more mature” personnel / salespeople as the individuals can facilitate a transition for a year or two. These are the types of companies that CED historically excelled at acquiring (and sometimes eventually installing someone from their leadership program as a profit center manager.) There are many of these companies that will be looking for exit strategies in the next few years.
• As seen with the Eaton change, the consolidation trend can change supplier / distributor alignment. This impacts relationships, line authorizations, in-field inventory, marketing planning, distributor / rebate programs, and more.

The acquisition beat goes on. Who will be next?