ESSCO Completes Acquisition of Star Equipment and Supplies
ELECTRIC SWEEPER SERVICE COMPANY COMPLETES ACQUISITION OF SUBSTANTIALLY ALL ASSETS OF STAR EQUIPMENT AND SUPPLIES
Enhanced Sales and Distribution Capabilities Position Company for Further Growth
September 2009
VALLEY VIEW, OHIO – The Electric Sweeper Service Company (“ESSCO”), a MCM Capital Partners portfolio company and the nation’s leading wholesaler of vacuum cleaner parts and vacuum cleaners to independent dealers, has completed its acquisition of substantially all assets of Star Equipment and Supplies (“Star”). Based in Hauppauge, New York, Star is one of the most recognized and trusted brand names within the independent vacuum dealer channel.
Since its founding in 1963, Star has built a loyal, geographically diverse customer base for vacuum cleaner parts and supplies, finished goods and central vacuum systems. Over time, company management successfully established coast-to-coast sales and distribution capabilities by opening and operating distribution centers in Hauppauge, Fontana, California and Earth City, Missouri, as well as customer service centers in Denver, Colorado and Atlanta, Georgia. Accordingly, ESSCO’s acquisition of substantially all assets of Star provides it with nationwide sales and service capabilities as demand for its vacuum cleaners, parts and supplies continues to grow.
Moving forward, ESSCO will leverage the Star brand as a key marketing asset under its corporate auspices. ESSCO also plans to retain Star’s existing management, customer service and warehouse staffs. Terms of the transaction are not being disclosed.
“ESSCO continues to aggressively expand its operations and customer base, despite challenging market conditions,” said Thomas P. Bianco, Chief Executive Officer of ESSCO. “This acquisition was attractive to us on many levels: Star’s name recognition is particularly strong within the independent vacuum dealer channel, and like us, they have developed highly customer-centric processes. The combined company will also stock more than 15,000 parts, feature an industry-leading fill rate and place a premium on dealer-focused marketing. This transaction aligns two powerful partners, each with deep industry expertise; employees and customers alike will benefit tremendously as a result.”
The acquisition of substantially all assets of Star will strengthen ESSCO’s industry leadership in its core independent vacuum cleaner dealer channel as management continues to expand operations in channels that include janitorial supplies and pet products. Concurrently, Star’s broadened geographical reach will benefit dealers in all regions by allowing them to receive orders quickly and make customer service and order entry available during business hours. Dealers can also eventually drop ship retail customers directly from the ESSCO Web site (www.essco.net) through the closest warehouse to their customer, thereby saving significant freight costs.
Additionally, ESSCO’s catalog and Web site, long industry-standard resources for parts and vacuum cleaners, will be enhanced as new products become available. The Web site includes more than 4,500 schematics in an easy-to-search format with real-time price and stock position search features. Dealers will also have one-stop access to proprietary equipment brands and parts that were once sold separately by each company. This, in turn, provides easier access to a greater assortment of products than ever before.
Company Pursues Fast-Track Growth
Star is the third company acquired by ESSCO in the last three years. In 2006, ESSCO acquired Cirrus Trading, LTD, a Cincinnati, Ohio-based importer of vacuum cleaners to the independent vacuum cleaner and janitorial and sanitation segments. That same year, ESSCO also acquired RW Home Products, a Midwest-based competitor. Bianco says that the company will continue to nurture organic growth and evaluate additional strategic transactions during 2010 and beyond. “We are pursuing and executing a very aggressive outbound growth strategy,” he said. “ESSCO has always marketed strong brands and maintained a strong customer service culture. We have aggressively reached out to our current and potential customers in several channels in order to better gauge their needs and provide solutions that help them to boost revenues.”
“ESSCO’s acquisition of substantially all assets of Star demonstrates the growth that is achieved through MCM’s partnership with its portfolio companies,” said Steven M. Ross, Managing Director of MCM Capital Partners. “As a leading investment firm dedicated to investing in micro-cap manufacturing, distribution and services businesses, we help our portfolio companies prosper by sourcing strategic growth opportunities and providing equity capital in concert with human resource talent. This acquisition will further position ESSCO as the clear leader in the niche market it serves with the broadest array of products and a national footprint, as well as the most experienced management team in the industry.”
About The Electric Sweeper Service Company
The Electric Sweeper Service Company is the leading wholesaler of vacuum cleaner parts and a leading distributor of vacuum cleaners to independent vacuum dealers in the United States. Founded in 1924, ESSCO primarily distributes original equipment manufacturer parts and generic substitutes for most brands of domestic vacuum cleaners to more than 3,200 of the 10,000 independent vacuum dealers in the United States. Key components include bags, belts, brush rolls, filters and attachments. Approximately 78 percent of the Company’s customers regard ESSCO as their primary supplier and with 99 percent considering ESSCO as primary or secondary. In addition to vacuum cleaner parts and equipment, the Company distributes small motors for a variety of niche applications. For more information, call 216/524-4141 or visit www.essco.net. A list of frequently asked questions is also available at www.essco.net.
About MCM Capital Partners
MCM Capital Partners is a Cleveland, Ohio-based private equity investment firm with origins dating back to 1992. MCM invests in niche microcap companies that are well regarded within their respective industry and whose management teams have demonstrated a track record of achieving growth. The Firm’s long-term investment philosophy is to enhance management’s ability to grow companies by providing equity capital in concert with access to strategic human resources. For more information on MCM, call 216/514-1840 or visit www.mcmcapital.com.
