RelaDyne’s acquisition strategy is a major driver of its growth.
By Jim Harris
For many businesses, being acquired by another company can raise a number of concerns. Those include the possibility of being abandoned by their existing leadership and left without any guidance from their new owners, or even worse, being shuttered entirely.
When RelaDyne acquires a new business, it does so not to destroy the structure its acquisition has in place or the relationships the business has with its customers. Instead, the company seeks to make its new acquisitions even stronger.
“When we buy a company, we bring tools and other things they need to make money,” says Jeff Hart, chief strategic officer for the company.
“We buy companies to grow them, not eliminate positions,” he adds. “We need to keep people in these companies because they are companies based on local relationships. Many of the customers of their companies are people they grew up with, go to church with or know in the community, and we need those relationships to build our business.”
The former owners of many of the companies acquired by RelaDyne remain with it following a buyout. “I’m proud of our ability to keep people involved in the businesses that we buy; that’s very important to us,” Hart says. “Keeping people around gives us credibility in the industry. If we’re just buying companies and getting rid of their people, we’re losing their continuity and ties to the local market.”
“These people want to stay and be part of the business and drive it forward, but maybe don’t have the capital or desire to do so,” Executive Vice President of Distribution Douglas Oehler adds. “We provide that capital, and give them a larger toolbox of things to sell, which gets them energized to stay involved and grow the business. Many people have stayed with us and have become investors in our business; that is something we are very proud of.”
RelaDyne’s strategy reflects the rapid consolidation within the wholesale and distribution industry as a whole, President and CEO Larry Stoddard says.
“We have three elements that I feel are necessary for success,” he adds. “We have industry folks that are well known, well-liked and have strong reputations, coupled with professional management that has been in other industries that have consolidated at a rapid pace, plus a solid source of capital to fund the growth. The combination of these gives us the opportunity to be a leader in the industry.”
RelaDyne is a leading distributor of lubricants, fuel and equipment reliability services, serving customers in 45
states. The company formed in 2010 following the consolidation of four businesses – Mid-Town Petroleum Inc. of Bridgeview, Ill.; Oil Distributing Co. of Cincinnati; The Hurt Company of Houston; and Pumpelly Oil Company of Sulphur, La. – into a single entity.
The four companies had an extensive history serving the automotive, commercial and industrial markets, with a collective 350 years of combined expertise and more than 10,000 clients, the company says.
Since its formation, RelaDyne has acquired more than 30 companies, with the majority of those transactions taking place in the past three years. The company’s latest acquisitions include Slidell Oil Co. and Hager Oil, both based in Alabama; Sensmeir Oil of Mansfield, Ohio; and Cardwell Distributing, which has 12 locations in Idaho, Wyoming and Utah.
All of RelaDyne’s acquired companies are fully integrated into its enterprise resource planning (ERP) and other business systems. “We don’t just buy a company and leave them alone, only thinking of them as a line on a balance sheet,” Oehler says. “They fully become one of our businesses.”
In addition to being integrated onto RelaDyne’s ERP system, all acquisitions are also moved to a common information technology infrastructure. This includes access to RelaDyne’s intranet site and common e-mail server. Acquired companies also follow the company’s standard operating procedures.
All RelaDyne companies also have access to RelaDyne Express, the company’s online ordering and account management program for customers. The system gives customers access to their invoice data and all RelaDyne products anytime and anywhere, the company notes.
RelaDyne’s acquisitions maintain a sales presence in their local communities, while non-customer-facing functions such as insurance, financing or IT are centralized by region. RelaDyne has locations in 19 states, with regional offices in Illinois, Utah and Louisiana in addition to its corporate support center in Cincinnati.
Last July, RelaDyne itself saw a change in its ownership when it was sold by its initial investor organization, New York-based AEA Investors, to Audax Private Equity, a private equity firm based in Boston. “Audax is extremely aggressive when it comes to acquisitions and investing more capital into our business, which allows us to grow at a faster pace,” Hart says.
The backing of its new owner gives RelaDyne the ability to make further acquisitions, particularly of larger companies. The company projects having 70 locations in 22 states before the end of the year. “Our goal is to push to the coasts,” Hart says, noting that Las Vegas is currently the westernmost point served by the company. “We are driven to become a truly nationwide distributor.”
In addition to distributing lubricant and fuel products, RelaDyne offers customers a number of value-added services. These include a turnkey bulk fluid program that supports additional advanced fluid-management strategies including views of inventory levels, consumption trends, confirmation of deliveries, and low-level and critical-level alerts and alarms. The company also offers custom blending solutions to customers with special product needs.
RelaDyne’s consolidated services offering, RelaDyne Reliability Services, provides customers with a comprehensive solution to their equipment reliability challenges. These services range from lubrication best practices training to hands-on implementation of lubrication process and procedure programs designed to reduce equipment downtime, increase efficiency and improve customer profitability. The comprehensive suite of more than 25 reliability services includes solutions such as oil filtration to remove contaminants from lubrication fluids; hydroblasting to clean systems using high pressures of water or oil; and varnish mitigation, RelaDyne’s patent-pending solution to remove varnish from oils and systems.
“We are helping our customers make their equipment work faster and more reliably,” Hart says. “We can dramatically impact our customers’ cycle times and efficiency, which in turn can help them with their bottom line. When you’re helping a customer make more money they focus more on the value of the relationship and less on the price of the products.”
RelaDyne’s diversity of services helps it overcome the price volatility inherent to its market. “We insulate ourselves by being well-rounded in all aspects of our trade,” Oehler says. “We don’t have a heavy concentration with one customer or one market; we have a diversified portfolio.”
One of the biggest challenges facing the company is a common one for many distributors. “We have an aging workforce in our space,” Hart says. “Many of the businesses we have acquired were started in the 1950s, so a large number of the people involved in them today are second generation. Our challenge is getting young people involved in the lubricant industry.”
The company actively recruits college graduates, and offers a training and development program geared toward making them future leaders in the organization. RelaDyne in the past year has recruited 10 recent graduates, and projects hiring an additional 20 next year.
“We feel that our core competencies, and the things we focus on the most, are integrating acquisitions as well as hiring, training and developing talent,” Hart says. “We think being the best at delivering oil is a given and what we have to do to keep our customers happy, but acquisition integration and recruiting, developing and retaining talent are the things that will really drive our business and set us apart in the industry.”
Pillars of Success
RelaDyne’s success and reputation for dependability are built on four foundational pillars of strength and differentiation:
* Unparalleled lubricant industry knowledge, resources and expertise;
* Best-in-class sales, distribution and responsive customer service;
* Industry-leading breadth and depth of product offerings; and
* The entrepreneurial ingenuity to solve customer equipment reliability business challenges through the design of cost-effective solutions, the company says.