What started with a phone call in October wrapped up about six months later with Trox acquiring St. Paul, Minn.-based Tierney as the final piece of its ed tech puzzle across North America.
Now, Trox CEO Erez Pikar says the company will target acquisitions that help the Phoenix-based AV integrator enhance its capabilities in networking and security.
Pikar calls Trox’s acquisition of Tierney, a 45-year-old family business started by brother Jim and Tom Tierney, as “a merger of equals” and notes “cost savings is not the goal.
“It’s more about spring-loading the company we’re acquiring for growth,” he says. “It’s business the day after the same as it was the day before but now with a ton more opportunities.”
Jim Tierney and Pikar had a long-standing relationship and that help to kick off the conversation last fall about a potential acquisition, says Tierney COO Michael Tierney. Trox was “on the back end” of another acquisition when Piker first understood it was possible for his company to add Tierney to the fold.
“The pandemic slowed down some of our M&A activity,” says Pikar. “Valuations changed and the market changed. We wanted to create a platform to allow us to do additional M&A work and that’s what we’ve done with this acquisition.”
Trox was interested in Tierney, he says, for “the sole purpose of scale and adding to the product category,” says Pikar. “Tierney, because of their size, reputation and quality of people, was always at the top of our list.”
This isn’t the first time another AV integrator has shown interest in Tierney, says CEO Robert Gag, but the company had resisted those overtures in the past. The pursuit by Trox was different, he says.
“What was really important to the Tierney ownership group was to find an organization that had similar values, that was committed to the four markets we were in and particularly strong in education,” says Gag, who will lead Trox’s sales organization. “Many years ago, we took the oath we were going to grow the company with their values.
“This time when we were approached, it seemed like it was a little different than in the past,” he says. “The excitement is where we can take this now. We felt like we were on our way to world domination at Tierney. This allows us to get there a little bit quicker.”
“I would characterize Tierney as a regional power when it comes to ed tech. It really made sense when the organizations started talking to each other, from products and services to a geographical standpoint, where we’re strong and where they’re strong,” says Gag.
“When you put it all together, there was no doubt they were the very best organization we could ever think about merging with,” he says. “That’s what makes me so excited moving forward.”
Why Trox Wanted Tierney
Trox’s acquisition of Tierney gives the combined company more than 750 employees across North America. Trox + Tierney now serves approximately 5,200 school districts across the U.S., Puerto Rico and Canada.
“We wanted a partner that shared our passion for education and was eager to help educators prepare for this exciting future world,” says Pikar. “As a combined company with unparalleled scale, Trox and Tierney will be able to offer new skills, greater value, and improved purchasing efficiencies to school districts, as well as access to a larger network of vendors, products, and geographies.”
Although the coronavirus pandemic limited the number of face-to-face meetings Trox and Tierney officials could have during their acquisition talks, it also compressed the timeline because everyone stayed close to their computers during the six-month negotiating window.
“A lot of M&A starts with face-to-face meetings,” says Pikar. “The culture fit and making sure everybody gets along is important.” Trox and Tierney leadership had two meeting in Minneapolis, he says. “You have to try to measure people remotely, which is different but we’re getting a little better at it.
“The silver lining is that people spending more time in front of their computers means they’re more available and there’s less travel and less time in airports. It made people more focused and able to get more done,” says Pikar.
“It’s a lot of work but it’s all about who you’re working with,” says Gag. “Everyone was focused on making this work, from the private equity firm that owns Trox to the brokerage firm we were working with. It really went smoothly. That’s because you have two solid organizations that are doing things the right way.”
“Everyone being glued to their computers all day wasn’t a bad thing when it comes to getting all the due diligence and all the details of this deal done,” says Tierney. “The success we’ve had in the last few years put us in a lot different position. This was when the stars were aligning for us.
“It was a unique event that took pretty much everything to fall into place,” he says.
“Once there was agreement on the terms of the deal, the deal moved along extremely quickly,” says Pikar.
Tierney says losing the family name is “one of the most difficult psychological parts to get over,” although he’s always downplayed the family business element and the fact the company was started by his father and uncle.
“You feel like you’re losing control of something you’ve had control over for a significant amount of time,” he says. “The power is in the combination of the two organizations. Once you get yourself to that point, some of the other concerns start to fade away.
“I happen to share a name with the people who started the company. What’s more important is we have an opportunity to be successful at what we do best. That’s far more important than the name on a building or on our shirts,” says Tierney.
At some point during the negotiations, Pikar called Tierney leadership and “asked us to trust him,” says Gag. “That phone call did a lot for me and the rest of our leadership team. We’re really excited to be able to offer our customers their strength, particularly in mobile devices.”
Gag and Tierney have been talking to customers and vendors about the deal since it was announced. Pikar expects Trox to “get the hard stuff done in the first 120 days” after Monday’s announcement and then to “work along the edges for about a year until everyone is comfortable about being one big happy family.”
Trox is “in conversations with quite a few companies” and has two letters of intent out to potential acquisition targets, says Pikar. This time, thought, they’re looking into companies with expertise in networking and security, he says.
None of the principals in the Trox-Tierney deal are surprised by the ongoing flurry of AV M&A.
“A very common conversation we have is customers saying they need less vendors who can do more,” says Pikar. “Smaller companies can’t expand their capabilities fast enough. There’s a lot of money sloshing around in the market from private equity and big companies with cash reserves.”
“Our customers are looking for more from us,” says Tierney. “Combining forces allows us to add more services and scale at a more rapid pace than we could before.”