Last month, The Cook & Boardman Group LLC, a specialty distributor of commercial door entry solutions and systems integration services based in Winston-Salem, North Carolina, announced its 10th acquisition in the two and a half years since CEO Darrin Anderson joined the company in the summer of 2017. A portfolio company of investment firm Littlejohn & Co. since October 2018, the acquisitions are part of a larger Cook & Boardman effort to continue to grow the company’s national footprint.
Discussing its January acquisition of Botzum Bros. Hardware in Akron, Ohio, Cook & Boardman CEO Darrin Anderson highlighted the family-owned culture at the supplier of architectural doors, frames, hardware and related products. “We don’t take lightly that we are being entrusted with a fourth-generation family business and we look forward to providing their employees with additional resources and expanded opportunities as we grow in this major market,” he said.
MDM spoke with Anderson about his acquisition strategy, including the kinds of partners Cook & Boardman is looking for, how they attract and integrate new businesses into the company and what the future holds for the fast-growing distributor.
MDM: What kicked off the M&A activity?
Anderson: I joined Cook & Boardman as CEO in July of ’17 and the M&A activity really picked up when I got here. At that time, we were owned by Ridgemont Equity Partners, a private equity group out of Charlotte, [North Carolina]. We completed four acquisitions in my first year and we’ve done six since we’ve been under the Littlejohn umbrella. Ten acquisitions in total since I joined as CEO.
MDM: Sounds like that was a clear strategy for you coming in?
Anderson: Absolutely. Most distribution is fragmented but when you look at, say, the plumbing, waterworks or electrical sectors, they are highly consolidated compared to our industry. So, although we were the largest distributor in our industry, we were really nothing more than a large regional player. The whole plan for me coming here was to turn us into a multibillion-dollar truly national player. And the only way to really do that is a combination of organic and M&A activity.
MDM: Let’s talk a little bit about the strategy behind the types of companies that you’ve been bringing in. What elements are you looking for in a potential acquisition?
Anderson: We registered the tagline, ‘National Presence. Local service,’ because we believe that every local market has a certain amount of autonomy to it. The one thread that is pervasive in our M&A strategy is that we want to buy market leaders. We believe that this is going to be a people business for as long as the door, frame and hardware industry exists. So, if you’re a market leader, it means you have a great brand, good leadership and a great team. It also means you have great relationships with your associates, suppliers and customers.
We don’t buy ‘fixer uppers’. If you’re not a market leader and not performing well it’s probably because you have weak leadership or don’t have the right people. And we’re not necessarily going to be able to fix that just because we’re Cook & Boardman.
Some of the cultural aspects we believe in: Servant leadership; being an associate-centric business and fostering a customer-first philosophy. Our customers still have plenty of choices and we need to deliver a superior product to them so that we become their distributor of choice.
We are trying to buy down-the-middle companies that do what we do. We really are trying to look for Division 8 [commercial door frame and hardware] businesses that focus on the core products and services that Cook & Boardman provides.
MDM: What approach do you take in integrating your acquisitions into the company? Do you have them fully assimilate under your brand or is it more about keeping their independence?
Anderson: We’re way more of the latter. If we buy a good company that has a great reputation and is a market leader, then that means they have brand equity. We don’t change the name and we prefer that owners actually want to continue to serve.
We don’t look at ourselves as their exit strategy — we look at it as a way for them to monetize their business and then continue in their careers, in their passion that helped them to build that business.
We have some things that we have to change when they become employees of ours; benefits change and payroll gets done centrally. Because we are the largest, most of the time those things are very well received by their associates because we usually have better benefits packages, including a better 401(k). A lot of times they didn’t have a 401(k) before.
We offer a great vacation policy and more career opportunities. We try to use our size and scale to help them by providing more training resources, more access to technology, increased capital and more HR support. We’ve tried to give them more capital and resources to accelerate what’s made them successful and then change as little as possible.
MDM: How do you centralize some of the leadership elements?
Anderson: One, we do a lot of corporate communication. I send monthly messages to our employees, our marketing team does quarterly newsletters, we have weekly senior management meetings and hold town hall meetings at our branches.
And then the other key is we have great organizational structures in place. Every branch belongs in a region. They have an RVP, a regional operations manager and a regional training resource. All of them have that infrastructure in place to be able to coach, guide and facilitate. And then once a year we bring all of our field leadership and top-performing salespeople into a centralized meeting and we get together for three full days of great interaction where they have opportunities to share their best practices, formally and informally. We have found that to be a very powerful tool as well.
MDM: How has your relationship with Littlejohn helped to facilitate growth?
Anderson: I would describe them as a great partner. They are a partner who understands distribution, a partner who understands building products. It’s nice to work with somebody who, when I go to them, they are a ‘been there, done that’ type of partner. I would say they’re appropriately hands-on or appropriately hands off. They’re fully supportive of the strategy that we’re employing. They act as a good collaborative partner, but they certainly let me run the business and they’re there to help and assist in any way that they can.
MDM: What is your acquisition outlook for 2020 and beyond, keeping the foot on the accelerator?
Anderson: Absolutely. We’ll likely do two more deals in the first quarter of this calendar/fiscal year. I would be surprised if we didn’t close another three or four more during fiscal year 2020.
MDM: Do you have any advice for other distributors on how to succeed with the whole M&A process?
Anderson: Our mantra is to make sure we delight our customers. Just as we strive to be the employer of choice to our associates, our goal is to be the distributor of choice to our customers. This can only be accomplished by delivering superior service that separates us from our competition. Differentiate your business from your competition through exceptional service and you will be their distributor of choice.
I’ve been in a couple of different distribution environments now. The one common theme that permeates through all of them is if you think that you’re going to win in the marketplace without being the employer of choice, you’ve missed the boat. You absolutely have to be the best at talent retention, first and foremost, and then talent attraction. We spend a lot of time and money here on making sure that our people do not ever want to see their careers go in another direction.
MDM: What are some examples of those efforts?
Anderson: We’ve added a paternity benefit that provides paid time off for the partner. If the wife of one of our employees has a baby, the employee also gets some paid time off. And this also applies to adoption or foster care.
I initiated a National Guard/Reserve policy where the employee doesn’t have to use vacation time when they’re spending their two weeks in the summer serving our country. We also honor those who serve by observing Veterans Day as a paid company holiday.
We’ve improved our 401(k) match for our employees. We have the most generous PTO policy. We’ve even implemented in some locations — not all — a new work schedule where they can start earlier Monday through Friday so that they can have a half day off on Friday.
We do all the other little things that mean a lot to our associates, like bring your dog to work day.
We’ve offered a new way to give to charity that we just implemented where people can do an automatic payroll deduction to one of four different charities. So, we’re giving back to our communities as well.
We started a scholarship program so that employees can participate in industry certification programs offered through DHI, our industry trade association. Once they go through the application process, they can participate in the programs without incurring out-of-pocket costs.
MDM: What else is on the horizon for you?
Anderson: We think this is really transformational. Our traditional world is Division 8 commercial doors, frames and hardware but there’s another construction division (28) that covers electronic access control products and services. Distributors have typically focused on one area or the other but not both.
We disrupted this model last year when we acquired A3 Communications, a security systems integrator. Now, that puts us in a very unique position to handle not just the traditional door, frame and hardware but also all the electronic access control and security requirements of the openings. That is truly transformational and we think that’s the wave of the future because we all know technology is only going to continue to expand and evolve.