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Shealy Electrical Wholesalers Goes from Acquirer to Acquisition Target, Part III

Shealy Electrical Wholesalers Goes from Acquirer to Acquisition Target, Part III


By Bridget McCrea

As an NAED member that’s well known for its activity in the merger and acquisitions (M&A) space, Shealy Electrical Wholesalers of West Columbia, S.C., caught the electrical distribution industry off guard in June when it announced that it was being acquired by Border States Electric of Fargo, N.D. Pending regulatory approval, the deal will be finalized on August 1, 2016. And with that, yet another independent, 17-location electrical distributor will be absorbed by a larger entity.

Part one of this series of stories looked at what Shealy Electrical was doing for its employees to become a full ESOP.  During that process, the company worked with Border States to see how its ESOP worked, and decided a sale was the best way to go. But at the beginning of the process, Shealy was not looking to be bought.

Part two of this series explains how Shealy went from not interested in being bought to agreeing to the merger with Border States.

Moving Forward Together

Once the deal is approved by the regulators and then closes on August 1, current Shealy Electrical President David White will serve as Border States’ regional vice president for the southeast region. Part of his job will include seeking out good opportunities to grow the business in that region—with some of those opportunities including potential acquisitions.

“We’ll achieve those growth goals by increasing market share and acquiring customers in our existing footprint, starting up locations in new areas, and/or acquiring other firms,” says White. “We think growth is important and we’ll continue to work to that end.”

In assessing the difficulty level of the Shealy-Border States deal, White says the process has gone smoothly so far. For example, there won’t be any issues with “overlap” of manufacturers/partners/suppliers because there is “zero overlapping geography,” according to White. “Border States’ philosophy is based on what makes sense in the local market,” says White. “We’ve been running a successful company with great relationships with our current suppliers, so there’s no reason to make any adjustments to our strategy.”

As for the actual negotiation process, White says the high level of trust that exists between the two organizations made the process fairly seamless. “We’re both part of Affiliated Distributors, and Tammy Miller and I have known each other for a number of years. We’ve come to know and respect each other and our respective companies, so it was a very comfortable discussion throughout the entire process.”

Finally, when asked how those negotiation sessions were kept quiet right up until the day that the acquisition was officially announced, White says both sides decided to keep their “circles of trust” fairly small until that announcement was made. “These types of deals impact a large group of people, so there was no reason for us to create any type of unnecessary distraction or concern,” White says. “We deliberately kept it to a small circle of people early on in the process, and it worked out pretty well.”

McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.

 

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