February 3, 2021
“We try to live by the golden rule, not only in every day dealing with customers and vendors, but also in our acquisition processes.” -Mark Patton
Want to know the secret to talent development, mergers and acquisitions, or working with private equity partners? It’s not classified information; it’s culture. In this episode, Jason speaks with Mark Patton, CEO of Colony Hardware, about managing the myriad relationships that fuel his company’s multi-territory success.
“What we've really focused on is growing the business, and in order to grow and scale a distribution business like ours, I think you really need to focus on expanding the footprint.” Since joining the company ten years ago as (COO and CFO), that’s precisely what Colony has done: 40 locations in close to a dozen states, all east of the Mississippi except for their Texas outposts. The company’s success has a lot to do with Mark’s keen financial acumen.
Earlier in his career, he completed GE’s financial management training program and, later, his MBA. He’s quick to cite a robust talent development track as another reason for the organization’s success. “When we're interviewing for the training program, we kind of use a panel approach; it's just so important to get that good cultural fit.”
The importance of good cultural fit extends to every aspect of Colony’s operation, including newly-merged entities. “We always do a fairly significant onboarding event [for ERP migration, for example] when we have a new group.” That transparency eases fear of the unknown amongst new members and fosters goodwill throughout the acquired organization. And when it comes to acquisitions, Mark prefers them to greenfield startups, even though he’s enjoyed success at Colony with both.
“I love doing acquisitions,” he says, adding, “we probably pass on as many acquisitions as we actually consummate because it has to be a really good cultural fit.” In fact, a company’s culture - not necessarily its price - can mean the difference between proceeding with an acquisition or establishing a start-up instead.
As for private equity relationships, here too, Mark aims for the right fit. “I think 15 % or more of the US economy now is controlled by private equity,” he says, “so, there, our relationship is they are a shareholder.”
Good financial partners bring a valuable perspective to the company. They also hold management accountable. While that may sour some owners against private equity, Mark speaks the truth: capital ultimately drives expansion. “You got to borrow it, you got to invest it yourself, you got to earn it, or you have to go get other partners and shareholders.”
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Distribution Talk is produced by The Distribution Team, a consulting services firm dedicated to helping wholesale distribution clients remove barriers to profitability, generate wealth and achieve personal goals.
This episode was edited & mixed by The Creative Impostor Studios.
Special thanks to our sponsor for this episode: HMI Performance Incentives, providing innovative, data-driven B2B incentive solutions.