From our initial spin in 2014, our corporate development strategy has been focused on driving growth by allocating capital towards strategic channels, value added product lines and related services, and key geographies. Acquisitions are a significant, historical part of this strategy.
- To expand key product lines and related services, such as valves and actuation, safety services, pumps, and electrical products
- To grow market share with our manufacturing customers
- To further penetrate our downstream and industrial channels
- To grow our international presence
We have been acquiring and integrating companies into our family for 150 years, with ten within the first 18 months of our spin-off.
|"We are pleased with how the capital we have allocated since the spin is performing, and we plan to maintain that track record. Our M&A pipeline is strong. Whether we are in a downturn or an upcycle, we enter discussions cautiously optimistic. As long as we have a solid balance sheet and ample liquidity, the target companies fit our strategy, are accretive, and are a good cultural match, we will continue to do deals; but, they need to hit on all of those cylinders."|
|— Robert Workman, Chief Executive Officer|
We use three principal assessments when evaluating whether or not to approach a company about potentitally joining the DNOW family: strategic fit, financial strength, and cultural similarity.
|"From the due diligence process to post acquisition, our team transitioned seamlessly, working to accomplish planned tasks with efficient timing - a great teamwork accomplishment."|
|— Chuck Keller, Challenger Industries|
- Utilize our strong balance sheet to allocate capital towards strengthening our market positions
- Enhance product and service offerings for our customers
- Enhance geographic reach
- Accelerate expansion of downstream and industrial segments
- Expand e-commerce and supply chain solution technologies
|"I look at the overall process across three things: Results-Process-Relationship. Does the Seller have the results – the financial metrics – that we value? Are they good people who will do the right thing for their employees, their customers, and their vendors? That's the relationship piece. And is the process of working together comfortable, reasonable, with give and take on both sides so that when the deal closes, you will want to continue to work side-by-side? It's like a three-legged stool where, if any one leg is longer than the other, the deal is bound to topple over."|
|— Michelle Lewis, Chief Strategy Officer and SVP, Corporate Development|
Leading Product Distributors and Solutions Providers
A company should be number one or two in the product lines and services they are offering to their customers. Their position may be through product distribution exclusivities or through the value added solutions they provide.
Strong Financial Health
DNOW seeks out companies who have been successful in building a financially strong business. We search for companies who have a proven track record of 8%+ EBITDA.
Add-on business or product lines can be any size if they expand one of our key strategic segments or operating companies, but our preference is for them to be $100 million or more in annual revenues.
Ongoing Management Interest
We look for financially healthy companies, with strong family or closely held management, who want to monetize their assets, provide a good future for their employees, and ensure that their customers are treated fairly. We also hope for management who not only want to remain a part of the business, but also to help shepherd their original business into the DNOW family.
Our culture requires the operating management team to demonstrate ownership over their P&L. We assess the skills, ethics, and compatibility of the executives of each acquisition candidate before determining if a business will integrate well into our growth-oriented organization.
Key Geographic Markets
While we will continue to seek out leading product distributors and solutions providers in North America, we are particularly interested in growing our presence in Europe, Asia Pacific, the Middle East, and South Africa.
Joining the DNOW family can offer significant benefits for your business:
- Monetization of assets, while providing a future for your employees
- Willingness to invest in growing business segments and channels
- Strong balance sheet and financials
- Global footprint – more than 300 locations worldwide – to distribute products and solutions to new customers, or to further expand your offering to our existing capabilities
- Strong brand and existing customer relationships
- Seasoned management team who understands the cyclicality of the industries we serve
- Familiar culture
|"I am pleased that our company was a nice strategic fit within DNOW, and compliments their existing pump and process solutions business. This will provide our company with the size and scalability to service more customers and provide expanded solution offerings. It is great to work with a group of like-minded professionals in an environment that will both challenge us and allow us to grow."|
|— Toby Eoff, Odessa Pumps|
|"Access to capital, a global infrastructure, and corporate support increased our visibility and credibility with our customers."|
|— George Ponce, Machine Tools Supply|
Our approach is direct and flexible:
- We are typically cash buyers, though we are flexible with our consideration and structure to ensure the best deal for both parties.
- Our acquisition process includes an exploratory due diligence process, signing of a fair LOI, an efficient due diligence review, and a prompt closing.
- We buy and invest in companies for the future, with a focus on growing our operations. We have long-term financial incentives designed to encourage continued development of the business.
- We believe that each company is unique and, while there are certain efficiencies associated with our process, we allow for variations to ensure that each Seller is comfortable with the integration process.
|"I asked you to educate me, but I didn’t realize that you were going to take me through a master's program."|
|— Seller remark to Michelle Lewis, Chief Strategy Officer and SVP, Corporate Development|
|"We were surprised at how easily we integrated into DNOW without losing our historical identity and market differentiators."|
|— Graham Chandler, Capital Valves|
|"Senior DNOW management visited with our management several times before the acquisition, and the majority of staff around the world immediately after it was completed. With constant good communication, we understand each other's needs and how to work together to solve any problems that arise."|
|— Mary Pitts, MacLean Electrical|
|"Addressing our employees' concerns was first and foremost for me (which DNOW did) and has subsequently led to immediate benefits as part of a larger corporation."|
|— Steve Short, Updike Supply|
Chief Strategy Officer, SVP, Corporate Development
Jun 2016: Power Service Inc.
Headquartered in Casper, WY, Power Service was a provider of rotating and process equipment engineering, design, installation, fabrication, and service solutions. The company distributed OEM parts including pumps, generator sets, air compressors, and blowers, and fabricated custom Lease Automatic Custody Transfer (LACT) units, Vapor Recovery Units (VRU), ASME code vessels, and water production skids. They served the Upstream, Midstream, and Downstream oil and gas markets, as well as the Mining, Power Generation, and General Industrial markets. Power Service's 312 employees were primarily stationed throughout the Northern Rockies region, Texas, and Oklahoma.
Dec 2015: Updike Supply Company
Nov 2015: Challenger Industries
Jul 2015: Odessa Pumps & Equipment
Headquartered in Odessa, TX, Odessa Pumps & Equipment distributed pumps and pump-related products to the oil and gas, industrial, and municipal industries across the southwestern U.S. Along with unit and part sales, they also offered rental, machining, repair, and field services. Odessa Pumps was a high margin business with a large existing footprint, which provided us with an entrance into the Pumping Solutions market. The company had more than 300 employees stationed across 15 locations throughout Texas, Oklahoma, and New Mexico.
May 2015: North Sea Cables Norge AS
Mar 2015: John MacLean & Sons Electrical
MacLean Electrical was an international supplier of electrical products and cables for onshore and offshore energy, marine, and industrial applications. They expanded our electrical product line offering globally, and diversified our upstream exposure with the lighting and industrial business. Headquartered in Dingwall, UK, MacLean Electrical employed 240 from its 11 locations throughout the UK, Australia, and the U.S.
Feb 2015: OAASIS Group
Jan 2015: Machine Tools Supply
Headquartered in Costa Mesa, CA, Machine Tools Supply was an industrial distributor and supply chain services provider selling MRO products, custom tooling, and industrial vending solutions to manufacturers in the commercial aerospace, energy, automotive, shipbuilding, and fluid control industries, as well as other industrial markets. This acquisition further developed our Supply Chain Solutions business and provided a strong foundation for our future development. The company's 123 employees conducted operations from corporate offices in California and western Mexico, and from customer sites in the U.S., Mexico, Philippines, and the UK.
Nov 2014: Progressive Supply
Jul 2012: CE Franklin
Jun 2012: Engco
May 2012: Wilson Distribution Holdings
Wilson Supply was a leading pipe, valves, fittings, mill, tool, and safety product supplier and supply chain services company, serving the energy and industrial markets on a global level. This acquisition joined two highly respected distribution businesses, expanding product lines and customers in the midstream, downstream, industrial, and tubular segments. Wilson had more than 2,500 employees stationed at over 200 locations. They operated primarily in the United States, but also had operations in Canada, the UK, Kazakhstan, and the UAE.
Feb 2011: Capital Valves
Capital Valves was one of the largest independent Europe-based valve distributors to the international oil and gas, power generation, and industrial gas markets. This acquisition enabled us to participate on large, complex international bids that were not previously available due to certain vendor qualifications. Their 26 employees were split between the headquarters in London, UK and the stocking and distribution center in Cambridge, UK.
Aug 2010: Group KZ
Group KZ was a distribution and supply store based in Atyrau, Kazakhstan that provided personal protective equipment, work clothing, and safety products to the local oil and gas industry. They were an established player with importation systems and permits already in place, which allowed us to make a quick entry into a new market, leveraged with our existing product line offerings in the region. Group KZ had a main office and distribution facility in Atyrau, a sales office in Aktau, KZ, and employed a total of 25 people.
Dec 2008: Sakhalin Outfitters
Oct 2004: Roma General Welding Services
Aug 2003: Neven Handelsonderneming
Jan 2003: LSI Specialty Electrical Products
LSI Specialty Electrical Products was a leading stocking distributor of specialty application electrical cable for the drilling and offshore marine industry. This acquisition enhanced our total supply chain offering, and filled an important product category void for our key customers. LSI employed a total of 25 people at its headquarters in Houston, TX and two branch locations in Oklahoma City, OK and Lafayette, LA.
Mar 2001: DEMIJ-Rotterdam
Jan 2001: Van Leeuwen Pipe & Tube (via Wilson)
Jan 2000: Republic Supply Company
Jan 2000: Texas Mill Supply (via Wilson)
Jul 1999: Dupre Supply
Louisiana-based Dupre Supply was a provider of pipe, fittings, valves, and valve automation services to energy-related industries, primarily in the Gulf Coast region. Their oilfield distribution strength, particularly in the production and industrial markets, enhanced our ability to become an industry leader in providing MRO supplies. Dupre was based in Lafayette, LA, with an additional corporate office in Houston, TX. They employed approximately 300 people across 12 domestic branches and three sales and operational branches in London, the Netherlands, and Nigeria.
Jun 1999: Continental Emsco Company (via Wilson)
Dec 1998: Dominion Oilfield Supply (DOSCO/TS&M)