Southwest Agency Merger – Hossley and L&PS

Hossley Lighting Associates, led by Al Near, and Lighting & Power Solutions, led by Don Henderson, agreed to merge last week, forming a powerhouse agency serving the Southwest / Gulf Coast area.

The two agencies, with a number of lighting lines in common, most notably Hubbell Lighting, combined to form Hossley Lighting & Power Solutions.

The new name reflects the company’s vision to be a full-service agency across its footprint – retain true to the companies’ heritage to serve the markets lighting needs and to offer “power” (electrical supply) lines.

According to the press release:

Hossley Lighting Associates is proud to announce that it has completed a merger with Lighting & Power Solutions, headquartered in Little Rock, Arkansas on July 28, 2020. Both agencies are manufacturers’ representatives for many of the lighting and electrical industry’s premier brands and this newly combined entity will cover the majority of six states including Arkansas, Louisiana, Mississippi, Oklahoma, Tennessee, and Texas.

Al Near, Chairman, CEO, and Managing Principal, is leading the charge along with Don Henderson as President, CFO, and Principal. Mike Virag will assume responsibility as the combined agency’s Executive Vice President, COO, and Principal.

“Our strategy in this merger of two strong agencies combining to get stronger is for our collective organizations to better provide exceptional industry service and consultation in addition to exceeding the expectations of the manufacturers we represent and the clients we serve,” said Near. “Our team of professionals has the knowledge and experience to support a project from initial design concept to final completion. The combined team is comprised of professional engineers, lighting consultants, former electricians, certified trainers, and ‘best in class’ quotations and customer service staff members. We are committed to delivering the best and most professional level of value-added services while operating with courtesy, integrity, responsiveness, transparency, and dependability.”

Henderson adds “Our model is progressive and we will continue to innovate and broaden our diversification strategy across our footprint.”  Virag comments, “Both teams have incredible talent and we are excited to see what this collaboration delivers in our employee-owned culture!”

As a larger regional player, Hossley Lighting & Power Solutions is positioned for exponential growth.

Hossley Lighting Associates has offices in Dallas, Fort Worth, San Antonio, Austin, Lubbock, and Tyler, TX. Lighting & Power Solutions has offices in Little Rock, AR; Shreveport and New Orleans, LA; and Jackson, MS. 

While following a trend of agency expansion, this merger is a little unique in a few ways:

• Rarely have companies that are primarily lighting agencies merged.
• The company does this with a conscious vision of being a diversified agency, enabling them to eventually be able to service a greater percent of a distributor, contractor, and project’s needs.

We caught up with Al and Don to solicit additional insights. They shared:

Hossley was an employee-owned company. Given that this is a merger, what’s the new ownership structure:

• We were, and still remain, qualified as an “employee-owned” company.  Prior to merger, Hossley Lighting Associates, Inc. was a 100% ESOP.  Lighting & Power Solutions, Inc. was privately owned.  As the two companies are merging the ESOP remains intact and Don, myself, and our third partner, Mike Virag, own the company.  All current and future employees of both companies will participate in the ESOP plan. (this is interesting as the ESOP model could be something for other agencies to consider.)
• We are combining forces to go to market under the blended name of “Hossley Lighting & Power Solutions”.  That is effective immediately with branding / imaging implementation occurring over the next 90 days.

Why the combination?

• A solid 75% of our core lighting and controls lines overlap in some or all of the geographic footprint (approx. 4 of the 6 states) that we cover which makes for a nice base from which to launch.
• The addition of the supply rep element was one of the most intriguing aspects of the partnership.   Both Hossley and LPS have a deep understanding of lighting and controls, but LPS also does extremely well with specifiable electrical and power products in various markets across our six-state region. We are absolutely seeking to expand our current product diversification to balance out across our footprint over time as the opportunities present themselves. (During our conversation with Don and Al they shared some analysis that they did that reinforced to them that lighting PLUS supply made sense to them as well as to distributors. A key element is that it creates a more aligned, tighter, relationship that is also, quite frankly, more profitable from a net commission viewpoint. Those interested in learning more should contact Al or Don.)

Was the deal driven by COVID?

• COVID has been an interesting dragon to slay for our entire industry and every aspect of our lives.  The timing for moving forward was not attached to COVID per se.  Both companies were strong going into COVID and remain strong through the completion of the merger.  COVID is, for us, more of an affirmation that now is the time for us to be bold in our approach as the post-COVID market dynamics are changing weekly, if not daily.  The driver in our daily discussions is to realize our version and vision of what the “Rep of Future” looks like.  Don introduced me to the NEMRA construct of what this could be years ago, and I became immediately hooked…obsessed with it even.  Time and future history will tell how we do, but we are excited to try and realize that goal.

What do you see as some of the benefits?

• The benefits of this merger are that both companies have common philosophies in terms of client connectivity at all levels of the channel in the design and construction community.  We place an extremely high priority on partnering with electrical wholesale distribution and value a mutually profitable relationship with those distributors.  As we expand our supply portions of our product offering, in particular, we firmly believe we grow even closer to the distributors and manufacturers that we have the privilege to serve.

Al also commented that an organization of a larger scale also then has greater talent capabilities and resources and hence can train staff as well as have a career ladder enabling those who want to grow within the agency the opportunity to thrive throughout their career.

Congratulations to Al Near (Chairman and CEO) and Don Henderson (President and CFO, and NEMRA Chair).

Thoughts

Some thoughts / questions to consider:

• The Gulf Coast / Texas market has been dominated by a few agencies, developed through acquisition, over the years. The new HLPS creates another platform for supply lines to consider. Given both companies’ pedigrees to focus on end-users / specifiers / contractors, their cultural identify aligns with what most manufacturers are seeking … having their agents call on contractors / end-users to create demand.
• While much of the agency consolidation that has occurred over the years has been between supply agents, will this merger stimulate mergers / acquisitions between lighting agencies? Will we see more lighting agencies and supply reps team up? (and yes, there are a number of successful agencies around the country that are lighting agents and supply reps.)
• It will be interesting to see which L&PS electrical lines consider expansion as well as the pace that they add electrical lines, and staff, in the areas where they currently do not have electrical lines.
• From a Hubbell Lighting viewpoint, this is now a large geographic territory under one agency. Definitely speaks to the issue of “alignment”. The two are “tied to the hip” with success mutually linked.

Distributors …

• What do you think about a combined lighting / electrical agency?
• What do you think about “mega agencies” or does it not make a difference?

Manufacturers

• What do you think of mega agencies?
  • Less to manage but do you gain / lose agency focus?
  • How do you have to manage / interact with them differently or, in the age of COVID, is it easier and perhaps less agencies for a regional manager to manage is good (as long as they make the numbers?)