Equity Electrical Associates Inc. and Electrical Distributors Network Inc. (EDN), two of the five largest buying/marketing groups in the electrical industry, have merged into a new organization with a combined membership of about 1,000 companies with a total of 1,150 locations.
Dick Noel, founder and president, Equity Electrical Associates, East Walpole, Mass., and Matt Roos, president of EDN, Concord, Ohio, will remain in their current positions at each respective buying/marketing group. In addition, Noel will become chairman of the board of Power Marketing Management LLC, the new parent company, while Roos will become president/CEO. Bob Snyder will remain as Equity's vice president and Stephen Perencevich will remain as vice president of EDN. No personnel changes are expected.
The two entities — Equity and EDN — will remain as separate operating divisions, maintaining existing company names, personnel, boards of directors, earning schedules and payment procedures, Noel and Roos said. The merger of the two buying/marketing groups forms a $6 billion-plus network of nearly 1,000 member headquarter locations with more than 1,150 individual locations in the United States, they said.
“We are extremely optimistic about the endless opportunities for both the member distributors and the associated manufacturers,” said Noel and Roos in a joint statement. “The timing is perfect, given the general state of the economy. The merger will prove to be profitable for all. It will have an immediate and positive effect on the bottom line of all members of both divisions. It will also offer double the promotional and operational offerings to members, providing economies of scale, plus the combined talent and budgets of both with a single objective.”
An estimated 80 percent of the sales volume of the combined entities is derived from the same manufacturers, according to a press release announcing the merger. While Equity and EDN do not at this time anticipate their members being able to buy products from all product lines, Noel said they would work toward that goal.
“Matt Roos and I are on the same wave length,” said Noel. “We both look upon this merger as the answer to the large national, regional and international giants in the industry constantly threatening the existence and growth of the medium and smaller independent electrical distributor. They (the industry's 250 largest distributors) occupy 50 percent of the total $73 billion market (according to Electrical Wholesaling magazine) served by this segment of the electrical industry. We, the now merged Equity and EDN companies operate and predominate in that ‘vast middle ground’ that represents $36.5 billion in sales.”
Noel also added that in the past, manufacturers and field sales people would spend most of their time calling on larger distributors; smaller distributors that may be members of Equity or EDN didn't get as much of the manufacturers' time. With the merger, Noel expects that manufacturers will be spending more time with EDN/Equity members in their visits to the field.
Barry J. McEachern, president, Star Electric Supply Inc., Wichita, Kan., who is an Equity board member, sees many benefits to the merger.
“Even though the groups will be run separately, the sheer number of total members under the holding company is very impressive,” he said. “I think it will be attractive to the vendors we partner with now and for prospective vendors,” he said.
McEachern added that Equity will be able to draw on EDN's EDI capabilities.
“EDN has EDI capability which has been missing with Equity,” he said. “This is becoming an increasing integral pathway of doing business for all electrical distributors. Vendors are requesting this and some are demanding it. The larger distributors already use EDI. EDN and Equity members are more medium- to small-sized distributors and EDI capability should improve the average Equity distributor's operations.”
McEachern is excited about the opportunities the merger offers Equity's members. “Equity is a great organization and the economies of scale the merger brings is tremendous,” he said.