In September 2016, Tech Air completed the acquisition of Liquid Technology Corporation (Liquid Tech) and signed a definitive agreement to acquire the local distribution assets of JW Goodliffe & Son, Inc. (Goodliffe), these were the 18th and 19th purchases for Tech Air. The Goodliffe acquisition was completed in October 2016.
gasworld spoke exclusively to Jr., CEO of Tech Air, Myles Dempsey, about the benefits of the double acquisition, building business culture and the importance of gradual brand consolidation.
The double acquisition
Tech Air already had a very large business in the New York city metropolitan area, but had no physical presence in New Jersey where Goodliffe is located.
“The Hudson river is a huge barrier. Our business was probably 99% east of the Hudson, and we really didn’t have anything in Northern Jersey. Goodliffe on the other hand didn’t have any business East of the Hudson, they stayed on the New Jersey side. So the acquisition gave us a presence in New Jersey and it naturally complimented our existing business. So now we cover both sides of the river.”
Goodliffe also owns an internet welding supply distribution site called Cyberweld. Goodliffe chose to keep this business and Tech Air took over the traditional branch based gas and welding distribution business.
“It was a win-win situation because the previous owner wanted to focus on Cyberweld, so he accomplished his objectivise and was happy to sell to us rather than one of the majors, who compete in the northern NJ market. Tech Air isn’t a competitor in that market, so it worked out well for everyone.”
“Liquid Tech on the other hand, was a completely different acquisition. The speciality gas manufacturing business is based in Florida and ships all over the country, mostly to distributors who then re-sell to end users. The company provides high-end products like EPA protocols and disposable calibration gases.” There are only a couple dozen labs around the country that are actively qualified by the EPA (The United States Environmental Protection Agency). These are called “A” labs.
“We already own one of these “A” labs in Long Beach California, and now we have another one on the east coast. “A” labs are the highest level of speciality gas capabilities that you can have. We have the capability to do EPA protocols on both coasts which, other than the majors, nobody else has.”
Today, the Tech Air companies operate 37 locations across the Continental US and one of those locations is still located in White Plains, NY, where Tech Air traces its roots back 80 years to the small, one-store operation known as County Welding Products.
“These acquisitions give us very strong geographic and product scope. We’ve got our existing platforms which we can continue to build from. In addition, we are going to try and establish ourselves in new markets as well. We’re much more of a national player than we were two or three years ago.”
“Each business has a different culture; the hard part is trying to get people to buy into the Tech Air culture. Sometimes it can be different from what the previous owner was doing.”
Jr., CEO of Tech Air, Myles Dempsey
When acquiring pockets of businesses all over the country, finding the right operating system is essential. Tech Air uses a combination of centralised and decentralised structures to function. Each region has its own decentralised management that is responsible for its respective area. However, the back office functions such as accounting, human resources and safety compliance is operated by one centralised area that serves all of the regions.
“This enables the regional managers to focus on the business and service, rather than the administrative stuff.”
Tech Air integrates each business onto the same computer system within a few months of acquisition, this enables the company to standardise procedures and reduce costs.
“It is much more efficient and cost effective to have everyone on the same system. When we buy these companies they each have their own back office and administrative function, so we consolidate”
Tech Air has left the existing branding in place in the majority of local acquisitions, but has begun to slowly migrate them over to the Tech Air brand. Dempsey believes it is necessary to build a strong culture.
“Ultimately we will move everything over to the Tech air brand but we’re doing it slowly. As long as the brand is a good name in the market, we don’t want to upset it right away. We do it slowly, communicating with the customers so as not to upset them.”
“Each business has a different culture; the hard part is trying to get people to buy into the Tech Air culture. Sometimes it can be different from what the previous owner was doing. What we do a lot of the time to help the transition, is to keep the former owner involved in the business.”
Tech Air is trying to build a culture that is unique to the company and Dempsey feels the company’s independence plays a big part in this.
“Our whole differentiator is that we’re still privately owned and we’re still entrepreneurial, we don’t have public investors.”
“Whenever there’s a change in the market, for example, with Air Liquid and Airgas, or Praxair and Linde, we feel like it gives us opportunity. Just like a lot of independents, we make our living by being an alternative to the large majors. And as they continue to get bigger we think its creates more opportunity. The independent still has 50% of the packaged gas market.”
Since 2011, Tech Air’s strategy has been to grow through acquisitions. This is a strategy that the company will continue to implement.
“We’ve got the support of our investors and our board. We’ve built a great management team with people who are going to be able to grow with the company. All of our people are very experienced and will be able to get us to where we want to go.”
“I’ve been in the business all my life, it was a family business and now we’ve got the opportunity to take it to the next level. I’ve still got a lot of years left in me to work, so all I’m focused on right now is to continue to grow Tech Air.”