CED To Buy USESI

After making 11 acquisitions in the eastern United States in just over one year, 72-location US Electrical Services LLC, Exton, Pa., is itself being acquired by Consolidated Electrical Distributors (CED), Westlake Village, Calif.

USESI’s founder, Richard Worthy, will continue to lead the company as its CEO, and the entire USESI senior management team will also remain with the company. The stock of US Electrical Services LLC will be incorporated under a new corporation (US Electrical Services Inc.), which will continue to operate as a separate entity.

Before founding USESI, Worthy acquired 20 companies and started up several branches to help Sonepar USA’s North American operations grow to $1.5 billion in sales and 200-plus locations in just six years. CED is another master of the acquisition game. The company has acquired dozens of electrical distributors since the 1970s, and has an estimated 5,200 employees and more than 500 locations. After making acquisitions, CED is said to utilize a decentralized operating strategy that keeps much of the decision making at branches’ local markets.

CED is now the fifth-largest electrical distributor on Electrical Wholesaling’s Top 200 listing of electrical distributors. According to information on www.cedcareers.com, CED has 43 branches in the Northeast and 14 locations in Georgia, the two regions in which USESI operates.

Worthy said in a press release that negotiations took six months and that he has known Dean Bursch, CED’s president, for some time and respects the company’s branch-centric operating model. “Their operating model has forged a clean, crisp customer strategy, operating strategy and employee strategy into a highly successful profit model that has created lasting value for the customer, employee and shareholder alike,” he said.

Worthy, a big believer in the use of central distribution centers (CDCs) to feed branch networks, said USESI’s regional hub-and-spoke model was “a distinct operating model and skill set that CED highly valued.”

“Even though Standard Electric (SESCO) was CED’s lone hub-and-spoke operating example, Dean Bursch’s appetite to have two totally separate models was apparent, as was their desire to enthusiastically support USESI’s continued growth,” he said. “As part of this transaction, SESCO will come under the USESI umbrella of regional companies along with Electrical Wholesalers, Monarch Electric, Weidenbach / Brown, and Lade/Danlar. No other CED business is planned to be part of USESI, as the two operating models are significantly different and the growth potential of a stand-alone USESI through further acquisitions and organic branch openings is very great in its own right.”

Since being founded in early 2006, USESI opened three CDCs and brought online nearly a half-million square feet of warehouse space. Worthy said the company has spent the last nine months integrating these companies, and is back on the acquisition and expansion trail with the full support of CED.

“We are a growth company and will continue to be such,” said Worthy. “The USESI executive team’s track record over the past decade has been one of prudent but consistent acquisition and organic growth in good economic times and bad. We are excited to have a sponsor that has the same high expectations as we do and recognizes our operating model’s potential.”