With fresh capital in hand, Roy Haley and WESCO Distribution are looking for even bolder growth-and more acquisitions in the future.
Four years ago, WESCO president and chief executive Roy Haley set some ambitious goals to rebuild WESCO Distribution, Inc.: Double the size of the company within five years through local market growth and acquisitions, develop a plan to eventually divest Pittsburgh, Pa.-based WESCO and focus on customer needs.
Haley's plan is working. Through 12 acquisitions in the past four years, the company has added $1 billion in sales, taken on 1,000 new employees and added 75 new branch locations. The most recent of these acquisitions was Reily Electrical Supply Co., Metairie, La., the 36th-largest electrical distributor in the country.
There's more to come, says Haley, and they might not all be in the electrical market. "We are not working on any acquisitions outside the electrical field at the present time, and I don't have any on the radar screen. But there are a lot of people who have gotten into the electrical business when their focal point had been another major commodity line. So certainly there is always the possibility that we could expand into other product categories."
Haley sees WESCO's acquisitions as part of a trend in the business world toward consolidation that's driven by a commitment to focus on customers' needs. "We're simply working to continue to enhance our ability to provide customers with the quality and type of support that they want. That's what's driving this."
One example of WESCO's focus on its customers' needs is the quest to learn more about SAP software, which a lot of WESCO customers use, he says. The company has had to learn how to integrate its data and information-handling processes with their SAP business systems.
Another example of Haley's ear for customer concerns is WESCO's intent to sell a majority stake in Fife Electric Co., Novi, Mich., to a minority distributor. As reported in EW last month, ("News Watch," May 1998, p. 10), WESCO is in talks with a potential, but as yet undisclosed, suitor to sell a majority stake in Fife Electric and to make it a minority-owned business, with WESCO retaining a minority interest. The proposed sale is part of an initiative to help WESCO's customers meet their targets for purchasing from minority-owned firms and boosting minority business, says Haley.
The other big news at WESCO is the recent management buyout, which Haley sees as a prelude to an IPO (see "News Watch," p. 10). The recent $1.1 billion buyout by senior management and a New York investor group does not change WESCO's plans to take the company public, says Haley. "In fact we would expect that we will be back in consideration of an IPO in the not-too-distant future," he says. "So this is not a shift in strategy or a major long-term kind of a decision."
The buyout enabled WESCO's managers to significantly increase their ownership position, a move that Haley says is good for employees, customers and suppliers. "It is, in many ways, like an IPO or is preparatory to an IPO," he says. "Strategy doesn't change, our operations don't change, our organization doesn't change. This was a way to accomplish a couple of objectives.
The shareholders and employees investing in the company will end up with a larger share of the company overall than before because of this transaction, he says.
"It gives us a great opportunity to have a much bigger share of the company overall, which, considering the size of the company, is a big deal."