Acquisitions Continue. USESI Acquires ASKCO

The concern that persistently “high” interest rates would affect the acquisition market are proving unfounded.

So far this quarter, the electrical distribution industry continues on the acquisition trail. Deals have included:

• HD Supply acquiring SRS.
• Graybar’s Valin business acquiring Dynamic Solutions. Dynamic Solutions specializes in precision motion control, machine vision, and collaborative robotics. It appears that this is the first time a Graybar acquisition has grown by acquisition, which could generate additional opportunities to support Graybar’s growth, and diversification.
• Rexel acquired a telecommunications distributor by the name of Talley
• Win Supply acquiring Meter Supply & Service, a waterworks distributor that gas, water, electrical and sewer products to support local and regional government agencies
• Reportedly EIS, which is owned by private equity firm Audax, is going to be “shopped” / sold. EIS is a ”specialty value-added distributor of electrical process materials and components.”
• US Electrical Services acquired Askco Electrical Supply, a single location IMARK distributor in Glen Falls, NY. The location will become part of Electrical Wholesalers in Connecticut region.

According to a US Electrical Services’ announcement, “Askco Electric Supply is, a respected family-owned distributor based in Glens Falls, NY. Established in 1974, Askco Electric Supply has served the residential, commercial, and industrial markets for 50 years, providing an extensive inventory and exceptional customer service to a loyal customer base.

Under the leadership of Jim Knapp and his family, Askco Electric Supply has built a reputation for reliability and excellence in customer service, values that closely align with USESI’s commitment to delivering high-quality products and services to customers.

As part of the acquisition, Askco Electric Supply will become part of the Electrical Wholesalers & HZ Electric Supply Region of USESI but will continue to operate under the Askco name. The acquisition is expected to close in July, and Askco Electric Supply will maintain its current location at 14 Cooper Street, Glens Falls, NY.

“We are excited to welcome Askco Electric Supply to the USESI family,” said Mark Osak, Region President. “Askco’s dedication to customer service and industry expertise make them a perfect fit for our organization. We look forward to integrating Askco and their staff into our region so we can continue to provide exceptional service to customers in the Glens Falls area.”

On behalf of all of us at USESI, we are thrilled to integrate Askco Electric Supply and its talented team into our organization. We are committed to continuing Askco’s legacy of excellence and are confident that this acquisition will benefit our customers and employees alike.

While many may not be familiar with US Electrical Services, the company, which operates under Standard Electric in Massachusetts and New Hampshire, Electrical Wholesalers (New England), Electrical Wholesalers (Connecticut), HZ Electric, Yale Electric, Monarch Electric, Maurice Electric, Lade Supply, Walters Wholesale, and Weidenbach Brown. The company has over 150 branch locations and is a member of IMARK.

Takeaways

While it may appear that the deals to date this quarter are disparate, there are some trends. They are:

• Leading distributors are seeking to diversify. While they could further “double down” in their core market, they are also seeking opportunities to diversify, leverage infrastructure, and seek customer synergies.
• If you consider the Top 150 from 2023 and exclude utility distributors and other non-core electrical distributors, the number of distributors who meet the Top 150 criteria has quickly diminished. Further identifying those who are “long-term” players, ESOPs (which are more expensive to acquire), and those with “younger” management, there are not many significant acquisition opportunities remaining. This then leads to other growth strategies.
• The single / small distributors, a la ASKCO, where there may be an aging owner, become another tier for acquisition, if they are willing. This typically is a “timing” issue.

But the one constant in the market is that the acquisition march will continue as there is cash on the sidelines as 1) a desire for growth and 2) the aging of the market and hence a need for owners to seek exit strategies to benefit themselves as well as ensure opportunities for their people.