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Verrex Acquired: 8 Lessons for Others Looking to Sell

Tom Berry Jr. discusses why he didn’t sell to another integration firm, how the additional capital will fuel future growth and the long, arduous due diligence process.

Thomas Berry Jr. used the word “family” a lot in describing the acquisition of his Mountainside, N.J.-based integration firm by an institutional investment group led by Five Crowns Capital – a transaction that he personally spent several years researching and orchestrating.

After all, “family” is the operable word for Verrex, a third-generation family business, founded in 1947 by Berry’s grandfather and one in which his own father has spent 50 years working.

For Berry and the rest of the active team at Verrex the acquisition by the private equity group doesn’t represent an exit plan. Berry, who’s in his mid-40s, sees it as a strategic move that positions the firm for far more growth than would otherwise be possible.

Verrex is far from alone in a group of non-colossal integration firms that are at least thinking about if not shopping around for potential buyers. As Commercial Integrator broke the news of Verrex’s acquisition, Berry chatted with me about the laborious but ultimately gratifying deal. There are takeaways for other integration firms:

It’s a Long-Term Project — “It’s been a culmination of five-plus years of estate and family planning.”

Focus on Sustainability and Growth of Organization — “We are a global organization but we’re a $40 million global organization so that is small compared to some of our competitors, Berry says.

“The quality of work that we do and the strategy, growth and direction that we want to go requires resources; it requires working capital; it requires an expertise that smaller companies don’t have. You can grow a certain amount organically. There’s a certain amount of talent resources that you can find locally but at some point you have to look beyond our own little ecosystem and find how we can make that next step. And our desire is to continue to grow and compete at the global enterprise level.”

To get to that next level, Berry adds, it became necessary to look “beyond just the Berry family.”

It’s Part Strategic Plan — Berry, who will remain CEO of Verrex LLC, isn’t going anywhere and sees the merger as beneficial to his employees as well. “I’m in my mid-40s. I’m not anywhere near retirement and I’ve spent the last 26 years here building up this company and surrounding myself with great people. We want that to continue”

It’s Part Exit Plan — It provides a “golden parachute” for Berry’s father and uncle who had been working in the business until very recently. As the only third-generation Berry involved in the company, “I knew early on that if I was to continue on there had to be an exit strategy for both my father and for my uncle.”

Creates Opportunities to Grow Differently — Verrex, which is overwhelmingly focused on the corporate market, has traditionally focused on diversifying not as much through various markets as by pursuing global diversity and varying aspects of the corporate market. Built into the acquisition by Five Crowns Capital, Berry says, is a requirement that the investors understand where the firm wants to go. With Five Crowns Capital based on the West coast, Berry indicates that Verrex hopes to expand beyond its domestic East coast and South presence and “strengthen our position as a national integrator.”

He adds that managed services is an important area of growth for Verrex.

Meanwhile, “Our core has always been corporate,” Berry says, but he sees partnering with a private equity firm as a powerful springboard for expanding more into other verticals.

How Berry Networked, Researched — The AV integration industry has no shortage of executive conferences and that played well for Berry who used them as a platform for discussions. “This industry is loaded with small mom and pop organizations,” he says, adding that since he started in the business he has been talking with other owners about setting up exit strategies. “So talking to people, but also going to a lot of these conferences [where] a lot of the topics that we talk about are succession planning, so I literally took those notes and said, ‘How do I need to apply these to myself?'”

Berry seems not to be able to overstate how much time needs to be invested in this type of acquisition. “The fact is, you don’t rush things like that,” he says. His top focus was taking care of his family, but also sustaining his organization. “I have 140 committed families that have decided to make this their career and [customers] rely on the stability of an organization. ”

Important to Seek Outside Help — Verrex hired a financial planner to help with pursuing the acquisition. “They go in and look for firms that are interested in an acquisition of a family-run organization.”

Keep Investor Options Open — Verrex considered strategic alliances with other integration firms. “We looked at other integrators like ourselves within the industry but we weren’t able to satisfy a variety of things,” Berry says, “and I think that ultimately would have changed the DNA of Verrex forever, obviously, where going to a private equity [group] who’s interested in entering a very exciting industry and specializes in family owned and operated organizations, it was a perfect fit.”

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