Contractor Evolves to Meet Customers’ Needs
“The A and B in A.B. stand for my parents, Aleda and Bill,” Glen said. “They bought a year-old company called the May Furnace Co. and used the names together. Besides, Posladek isn’t a real marketable name.”
Glen Posladek describes his company as an original heating and cooling contractor that expanded into electrical services, focusing on residential and light commercial service and replacement. They have added plumbing and appliance repair and currently have revenues of $10 million.
A.B. May was the second contractor acquired by R.S. Andrews in 1998, one of approximately 20 currently owned by the Atlanta, GA-based company. Glen said the company was looking to merge with a consolidator and felt that R.S. Andrews was the best choice.
“I was looking for what was best for my family,” said Glen. “In this case, I felt that bigger was better. The timing was right and I felt that [joining with R.S. Andrews] would be better for our employees and customers.”
Teaming with R.S. AndrewsThe Posladeks were familiar with R.S. Andrews because of the work that A.B. May did with Kansas City Power & Light (an R.S. Andrews shareholder) developing home warranty programs. It seemed like a good fit, since R.S. Andrews puts so much emphasis on home warranties.
“The acquisition gave me the opportunity to work forever or maybe longer,” Glen joked.
Glen Posladek did his research about consolidators, talking to several in the area. He said some of the other independent contractors in Kansas City didn’t know what to make of the consolidation business, so he took a gamble that selling his business would pay off.
“If you are a small businessperson, you are used to rolling the dice,” Glen said. “I could have played it conservatively, but it was exciting for our future. The utilities were becoming active in the area [one purchased a local contractor] and it was time for us to compete against these bigger service companies.”
A.B. May employs 100 people, and Glen said they “have reacted favorably to the deal. Most of them viewed it as progress.”
Glen has been very pleased with the results of the acquisition, stating that revenues have doubled since the deal was closed. The company has developed new selling and installation strategies, pricing structures, and even purchased a local plumbing company (Bone Plumbing) to add to its growing list of services.
“We merged two companies to get to two plus two equals five,” he said. “Now our current strategy is to grow internally. We plan to grow 15% each year.”
Bill Posladek added that the company has continued to grow despite the tight labor market. “We have a positive attitude among managers that we can acquire good help,” he said. “We’ve been well staffed with service technicians and installers and haven’t been pinched for help, unlike other people.”
Speaking of his competitors, Bill Posladek thinks that the Kansas City market is big enough for independent and consolidated contractors. “There will always be a place for everybody,” he added.
With a whirlwind of activity both locally and nationally, A.B. May is keeping an eye on growth and profitability, but the company is also watching changes in the hvacr business.
Keeping an Eye on the Industry“There is a lot of churning in the industry,” added Bill. “Utilities are getting into the consolidation movement and then divesting themselves. I don’t think all of the changes have been completed.
“The consolidation movement is quiet. Businesses are stabilizing and assessing where they are. In one or two years, you’ll see a jump in the consolidation movement. When consolidation started, companies were acquired without much thought — to add volume. Now there is a method to consolidation.”
Glen isn’t sure the Kansas City area will see much more consolidation in the future, although he isn’t sure why.
“For some reason, consolidators have not been successful in Kansas City despite making great efforts,” he said. “It’s been mainly an independent town, although I’m not sure how long that will last. It’s not going to get any easier for the independents.”
Glen added that the consolidation movement has been good for the industry, too. “Consolidators have raised the bar, pricing is more realistic, and there is better training,” he said.
“Consolidation has had the opposite effect on the business from what people originally thought — that consolidators would lower prices and independents would be unable to compete.
“Consolidators have done a great service to independents: raising profit margins and forcing other people to get better.”
Publication date: 09/18/2000