Executive Vice President Sam Drago of industrial distributor Drago Supply Company, Port Arthur, TX, recently answered some questions from MDM on his family's decision to sell to Motion Industries, a subsidiary of Genuine Parts Company.
Drago tells MDM that the decision to sell the business came after "years of thought, deliberations and several other offers from excellent companies. This business has been the central focus of our family for over 77 years, so the decision didn’t come easy."
The key reasons for selling? According to Drago:
- The timing was right. The company has a history of business with large account contracts. Such a business model, in today's market, prefers larger, national scale suppliers and does not favor a regional distributor, he says. Under Motion, Drago could continue growing in that direction. "Further growth would necessitate taking on considerable new debt that we did not feel comfortable assuming at this point in our lives," he says. "The question became: 'What do we do with the business, now that we're all approaching retirement?'"
- The company has never been in a better financial position. Drago is seeing double-digit growth again in 2008.
- Motion Industries was courting the company. "We all agreed that Motion was one of the companies to whom we would be willing to sell. Bill Stevens and his management team are a first-class group of people and were great to work with during this process," Drago says.
- The brothers did not want to walk away from the company when they retired. "A lot of family members and good people have made Drago Supply successful, and we felt they deserved the right to take it forward," he says. "There’s another generation of excellence in this company and I think we’re going to make waves."
Drago says that the company will continue to operate as before, with its current management team. Motion has asked Drago and his brothers to stay on as long as possible to manage the business during the transition. His brother Joe has two sons who will continue with the company.
"We’ve always been a strong regional supplier and we believe this acquisition provides the opportunity to take Drago Supply national and even global," Drago says. "There are a lot of very good, dedicated, hard-working professionals in our company that understand 'service' as it should be. We still seriously listen to customers and respond to their expectations.”
"Drago Supply has always been operated on very basic, simple business principles that focus on service. We buy stuff, store it and sell it to customers who need it. Others try to do the same thing, but we genuinely try to over-service the customer and to outperform our competitors. Most of this service attitude was formed by our father, Philip Drago Sr. (who just celebrated his 97th birthday), when the business was a small, neighborhood hardware store. We will still operate and service our customers in a very personal way – just as we do now. There is still a lot of pride in this company and in our slogan, '. . . the Drago Difference.'"
