By Labor Day, Bellevue Builders Supply was officially going by the name Stock Building Supply, the Raleigh, N.C.–based pro dealer that had acquired Bellevue in May. Since then, seven-yard Bellevue, based in Schenectady, N.Y., has discontinued its affiliation with the buying group ENAP and has been switching its operations to Stock's “Trend” computer system, which should be completed by year's end.

However, its new parent Stock left intact those elements of Bellevue—its yards; cabinet distribution; plants for panels, trusses, and doors; and shops for windows and counter-tops—that helped generate $100 million in revenue last year and made it attractive to Stock in the first place. Several members of the Lucarelli family, which had owned Bellevue, stuck around to run the business, which became Stock's 10th district and will serve as its launch pad for expansion in New England, says Fenton Hord, Stock's president and CEO.

With 40 acquisitions in 10 years under its belt, Stock knows that integrating companies into its corporate whole doesn't always go this smoothly. After paying $172 million for Anderson Lumber in Utah in 2000, Stock closed eight of that dealer's 35 yards and had to redirect some of the remaining stores away from the consumer side of the business. “Now, our Anderson operation is top drawer,” says Hord.

What's preserved and what gets tossed after one dealer buys another is a balancing act, as a certain amount of homogenization is inevitable given the rationale that drives many of these agreements. “We have national customers—like Pulte, Centex, and D.R. Horton—and we want them to know they are dealing with Stock Building Supply in any market we sell them,” explains Hord. But the perpetuation of an acquired company's heritage and market strengths can be just as critical to the success of these marriages. When Carter Lumber bought three-yard Holmes Lumber in Ohio in April, it did all it could to hold onto Holmes employees who “are the ‘face' of the stores” in towns serving Amish communities, says David McCafferty, Carter's vice president of marketing. “We didn't want to do anything that would disrupt that culture.”

Acquisitions also help buyers discover a better mousetrap. Paul Hylbert, president and CEO of Redmond, Wash.–based Lanoga Corp., noted that two of the company's purchases—of Hoida Lumber & Components in DePere, Wis., and Home Lumber in Littleton, Colo.—gave his company fresh insights into structural component manufacturing and selling to home builders, respectively.

Dealers who have sat on both sides of the negotiating table agree, however, that the initial chemistry between buyer and seller usually signals whether the parties can work in tandem. “We acquire people and relationships in markets we're interested in,” says Hylbert, whose company recently added 26 Wickes Lumber locations to its Winona, Minn.–based United Building Centers division in the Midwest and one to its Home Lumber division (see “Second Chance,” page 82).“We try not to be intrusive and [we] let them run their own businesses.”

On the other hand, Hord says that, over the past five years, Stock has walked away from several deals “because we didn't think they would blend with our management.”

Indeed, that seems to have been what occurred between Dallas-based Builders FirstSource (BFS) and Franklin, Ind.–based Davidson Industries when, after months of negotiating, the two companies abruptly broke off acquisition talks last spring. Before it fell apart, the BFS-Davidson deal had all the makings of a classic market position play between a consolidator and a solid independent.

Shake It Up Overall, when any pro dealer expands through acquisition, the dealer typically has one of three purposes in mind: to gain control of a market where it already has yards, to extend an existing market, or to plant its flag in a new market by purchasing a strong stand-alone operation. “Each situation is different and it depends on the rationale for the acquisition,” says Kevin O'Meara, BFS' COO. And sometimes it's necessary to make significant changes after a deal is signed and sealed.

BFS, for one, isn't afraid to shake things up after it takes over a business. Four years after acquiring Blackstone Lumber in East Brunswick, N.J., in August 1999, BFS trimmed that pro dealer's personnel and divisions after merging its operations into BFS' larger Atlantic Group in Frederick, Md. And when BFS agreed to purchase Bond Builders Supply in Cashiers, N.C., last November, its strategy was to appease customers who had to drive 90 minutes to shop BFS' yard in Brevard, N.C. “Fifty percent of our customers had been shopping at Brevard,” says Jeff Akins, who worked at the Brevard yard for 22 years and since January has been operations manager at the Cashiers yard, where sales this year are projected to rise to $5.5 million, from $2 million in 2003.“We were just scratching the surface with pro customers.” Once Bond got sold, BFS made it drop the plumbing and electrical categories entirely and relinquish its Benjamin Moore paint franchise. Bond's scenario was an anomaly, in that these changes were visible to customers who normally wouldn't know a yard had new owners until they saw a different name on the storefront or their invoices. Consider when Beloit, Wis.–based ABC Supply bought B&F Supply, a roofing distributor in Daytona Beach, Fla. The deal happened on Feb. 17, “and by Feb. 18 our name had been changed,” recalls branch manager Bill Klomp. But for the most part, ABC has left 40-year-old B&F alone, even as it has upgraded the branch's employee benefits and computer system (B&F had been doing manual order-entry).

Overall, most buyers say they try to get their own systems into the yards they acquire as soon as possible, partly to maintain consistency in their financial analyses and reporting. O'Meara points out that smaller companies tend to have operational deficiencies—such as erratic inventory management—that more sophisticated computer systems can spot quickly.

The Strober Organization, for example, had converted all 26 Lowe's Contractor Yards to its Yard Master computer software even before Strober completed its purchase of those locations from Lowe's in January, according to Ben Phillips, Contractor Yards' CEO. He noted that Lowe's—where Phillips worked in the 1980s—had allowed Strober to train Contractor Yards' employees on the new system prior to signing the agreement.