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With at least 10 Top 200 distributors acquired over the past 12 months or so, mergers and acquisitions have heated up again in the electrical market.
It’s not all that unusual for 10 Top 200 electrical distributors to be acquired in one year, according to Electrical Wholesaling’s acquisition database, but it typically only happens in the frothiest of acquisition climates. We appear to be in one right now. The Top 200 distributors acquired in 2017–2018 are Associated of Los Angeles, Los Angeles, CA; City Electric Supply, Syracuse, NY; Tacoma Electric Supply, Tacoma, WA; The Hite Co., Altoona, PA; Kriz-Davis, Grand Island, NE; Electrical Equipment & Engineering (3E), Windsor Heights, IA; Womack Electric Supply, Danville, VA; Upchurch Electrical Supply Co., Fayetteville, AR; Reynolds Co., Dallas, TX: and Tri State Supply, Washington, PA.
As EW’s editors were updating our database of more than 500 acquisitions of electrical distributors since the 1990s, we decided that it might be interesting to analyze some of the acquisition news of the past 25 years. This article offers some insight into how the largest acquisitions have changed the landscape of the electrical wholesaling industry over the past three decades, and our analysis of some of the distinctly different growth strategies some of the biggest acquirers in this industry have used to build their branch distribution networks.
DIFFERENT STROKES FOR DIFFERENT FOLKS
Electrical distributors use acquisitions in their growth strategies in many different ways. Some companies, like Graybar Electric Co., St. Louis, MO, or Elliott Electric Supply, Nacogdoches, TX, blend them with aggressive branch start-up campaigns, while other distributors rely on acquisitions more heavily to expand into other markets. Some companies build their market presence almost entirely by branch startups, like the Britain-based City Electric Supply, which has quietly built a billion-dollar business in the United States with more than 400 branch startups. Here are the most common strategies electrical distributors use to make acquisitions.
Acquire a company to establish a geographic presence in a market adjacent to an existing branch’s market area. Border States Electric (BSE), Fargo, ND, used this strategy to fill in some gaps in its coverage of the West North Central region with its 2014 acquisition of Western Extralite, Kansas City, MO, and its 2017 acquisition of Kriz-Davis, Grand...