Republic Companies and Teche Electric … Distributor Deals #7 and #9

The addition of Republic Companies and Teche Electric makes it 9 distributor deals announced during Q1!

At the NAED South Central we heard of two distributor deals. One related to CED acquiring the Rockwell APR (we’re calling this deal #7), and probably some resources, from Stanion Electric and the other was a distributor that was invested in by a private equity firm.

While we knew the name, since it wasn’t in the public domain we didn’t share.

Now we can share that it is Republic Companies.

Deal #6 – Republic Receives Private Equity Firm Investment

Republic received an investment and was “recapitalized” by Graycliff Partners. This New York-based private equity firm invests in small to mid-sized companies and they typically make investments in the $10-50 million range. Interestingly, the company also has electrical industry experience as Graycliff is the owner of Fulham, which many know is a lighting manufacturer.

And the company is seeking “add-ons” for both companies, indicating that they are seeking acquisitions in the lighting and electrical / HVAC distribution space (as Republic is an electrical and HVACR distributor based in Davenport, IA.)

Republic is a five location IMARK distributor (with branches in Cedar Rapids, Davenport, Dubuque, and Des Moines IA, and a location in Peoria, IL.  According to a press release, Republic was founded in 1916 (107 years ago!). The company is a third generation company. Here’s an informative video on Republic. In 2014 Republic acquired Yeomans Distributing, an HVACR distributor.

According to a press release, Republic was founded in 1916 (107 years ago!). The company is a third generation company.

According to a case study from its advisor, Uplift Partners, “When it became evident the incoming generation was not going to take the reins of the family business, the idea of transitioning ownership had become increasingly part of discussions among family members.”

Uplift took the company, and the family, through its process and identified core principals and then found prospective partners who met the criteria. … and eventually a partner, in the form of Graycliff Partners, emerged.

Frequently in these types of deals, ownership stays involved and still retains an equity position, enabling them to have “two bites of the apple” … this sale and hopefully a future sale as they help grow the business.

And according to the Uplift Partners case study “With a strong private equity partner, the family was able to achieve everything they were looking for in a transaction, including upholding the “must have” principles highlighted above (in the case study), while also participating in the future potential of the business by rolling over some equity alongside the new partner. This last piece, the idea of continuing in some ownership of the business, proved to be a real difference-maker as it allowed the family to announce to the employees, customers and suppliers alike “we’re not going anywhere”.

With the business, in advisory terminology “recapitalized”, the opportunity is positioned as a “forming a new platform”.

(This posting has been updated with additional information that was unknown at the time of writing. Some information has been removed as it was dated from public sources.)

Deal #9 – Rexel acquires Teche Electric Supply

Teche Electric Supply, ranked #133 in the 2022 EW Top 150, with estimated 2021 revenues of in the low $40 million range (which makes 2022 in the $45-50M range) was sold to Rexel, according to this press release:

“Rexel USA, Inc (“Rexel USA”) announced that it has completed the acquisition of the Teche Electric Supply, LLC (“Teche Electric”), headquartered in Lafayette, Louisiana. With the acquisition, Rexel continues its investment to bolster services along Louisiana’s Interstate 10 corridor and strengthens its Gulf Central Region.

“We are excited to welcome the Teche Electric team into our Rexel USA family,” commented Brad Paulsen, Rexel USA CEO. “Teche Electric has an excellent reputation in the commercial and residential markets and complements Rexel’s current position in the industrial market in southern Louisiana. Brendan O’Hare, our Gulf Central Region President, and his team look forward to partnering with our new Teche Electric teammates as we continue to deliver an exceptional customer experience.”

Dave Frazer, Teche Electric CEO and President, stated “We are honored and excited that Teche Electric Supply will be joining Rexel, a forward-thinking, innovative leader in the electrical distribution industry. Rexel’s company and culture will create strategic value for our employees, customers, and suppliers and our combined geographic footprint will offer products, services, solutions, and digital capabilities that will help our business grow successfully.”

The transaction is expected to close at the end of the month.”

Teche Electric, a four location (Lafayette, Baton Rouge, Broussard and Lake Charles, LA) distributor serves primarily serves the residential and commercial markets with both ABB and Siemens as its switchgear lines. Rexel, which currently served customers in the surrounding territory, was focused on the industrial market and this acquisition provides Rexel with broader exposure to the market, hence diversifying its customer base.

Teche was a long-term AD member. It was founded in 1962.

Reportedly Rexel plans on keeping the Teche name, at least for the time being, to benefit from the goodwill accrued over 61 years. Rexel, however, typically converts smaller acquisitions to the Rexel brand.

Given that Mayer Electric used to have a location in New Orleans, and that Mayer is now part of Rexel, it wouldn’t be a stretch to think that Wes Smith helped facilitate the opportunity for Rexel.

Takeaways

• So, 2023 is off to a fast start. At this pace there would be more acquisitions than 2022, however, industry prognosticators have shared that they would take the “under” for 2023. Only time will tell as we’ve heard of at least four more that are either in discussions or considering … and there are presumably more.
• The Republic deal is interesting as it is the second one to a private equity firm in the last 12 months (Wiseway being the other.) Electric Supply is also owned by a PE firm. It is expected that these firms will be seeking “bolt-ons”, especially of smaller distributors (perhaps a redux of the Green Mountain strategy?)
• Teche was a little “different” for Rexel as three of their last four were Rockwell distributors (Buckles Smith, Horizon Solutions and Winkle) and the fourth was a significant acquisition (Mayer). Teche is a smaller, construction-oriented distributor. Perhaps the deal driven by the Gulf Coast president? Perhaps driven by a strategic desire to fill a marketplace hole?

Congratulations to both Republic and Teche senior management / ownership on achieving their goals.