Authority Brands Retail Capitalizes on Growth Through Acquisitions

By Brenda Pantano, CFE, Director of Communications at Authority Brands

In 2021, the retail locations of Authority Brands three Trades Brands (One Hour Heating & Air Conditioning, Benjamin Franklin Plumbing, and Mister Sparky Electric) had their sights set high on growth. The goal? Double their business in three years.

“When we thought about what that growth would look like, we quickly identified a strategy of acquiring local contractors to add significant value to our business,” said Bob Glassick, Chief Operating Officer – Retail at Authority Brands. “We started by building a plan for growth: thinking about organic growth, improved execution and processes, brand expansion, and acquisitions.”

Glassick and his team kicked off this strategy in May of 2021. They started by building a playbook to identify their process, support team, and prospective acquisitions. “It’s actually easier to identify prospects for acquisitions than you would think,” he said.

Identifying and Bringing on New Acquisitions

In order to find prospects interested in selling their independent trades businesses, the team have a few different tactics. This includes networking with local vendors, business brokers, and direct mail campaigns. “We were surprised at the number of responses from a simple targeted direct mail piece sent to competitors in a few markets,” Glassick said.

As the team found those interested prospects, it would then be time to work with and vet those candidates. They found it was important to ensure they were managing seller expectations and that their financial model and business valuation generated an acceptable IRR and payback for the investment.

From a marketing perspective, Emily Fahner, Director of Marketing, would be involved from the beginning to learn about the business they are acquiring to begin digging into their digital presence and general marketing structure. Fahner is also charged with ensuring the acquired company and their customers are seamlessly integrated. This includes executing customer data/communication, website redirects, merging social media accounts, press releases, and phone line transfers.

“We’ve found a great groove with strategizing throughout the process of each acquisition based on specific area needs,” Fahner said.

Lessons Learned

Throughout the last year and a half, Glassick and the team have continued to refine their strategy, with key lessons and takeaways from each acquisition. From a financial standpoint, it is important to know your target annual revenue and to have a financial model to evaluate the investment. It’s also important to understand different valuation approaches.

Identifying the key team members that will be needed as part of the acquisition process and ensuring you understand the capacity of your team is also critical. If there is not capacity to grow quickly, acquisition might not be the best next step.

When it comes to executing the acquisitions, be sure to develop a thorough process for acquisition and stick to it. Work with legal counsel to develop non-disclosure agreements, letters of intent, and asset purchase agreements. Determine your process for vetting potential acquisitions. It is vital to do your due diligence.

Last, have an integration plan. It’s important to make sure you are set up to succeed when it comes to onboarding a new acquisition. This will ensure that you can successfully build on the investment.

The Authority Brands retail team has found great success in their efforts to grow through acquisition. Since May 2021, they have closed six deals, adding $7.5 million in annual revenue, added thousands of customers to their database, and were able to bring on 15 new technicians/installers.

The team intends to continue their efforts through 2023 to continue to grow.