A little more than two years ago, a Pittsburgh investment firm announced the sale of one of its businesses to a counterpart out west.
Incline Equity Partners had acquired AFC Industries from another firm six years earlier, and subsequently undertook an ambitious strategy of mergers and acquisitions.
But in the distribution industry, rapid consolidation always seems to be a relative term: AFC’s efforts under Incline would ultimately pale in comparison to what was around the corner.
AFC, founded in Fairfield, Ohio, in 1987, distributes fasteners and C-Class components, as well as provides a range of supply chain and value-added services, including assembly, kitting, packaging and other custom options.
The company remained under its founders for some 25 years until, in early 2012, it reached an agreement to “recapitalize” the business with Rockwood Equity, a Cleveland-based firm that specializes in partnering with small, privately owned businesses as they approach critical junctures, such as owner retirements or ambitious growth initiatives.
Under Rockwood, AFC acquired Pennsylvania fastener distributor and logistics provider Dell Fastener, expanding its overall footprint from Ohio and Indiana across the U.S., including Georgia, Pennsylvania, Michigan, Oregon and California.
Just more than three years later, the company was sold to Incline. Over the coming years, AFC would add a dozen more businesses and triple the overall size of the company. By the spring of 2021, AFC operated 22 stocking locations in North America and had added a presence in Mexico.
In April of that year, AFC was sold to its third investment firm. Bertram Capital, headquartered in Foster City, California – between San Francisco and Silicon Valley – describes itself as a private equity firm that aims to make investments in “lower middle market” companies that operate in fragmented industries, then undertake a “buy and build” approach to acquire more scale, market share and stability.
The firm said AFC had become a “consolidator of choice” in the C-Class sector and was well-positioned to meet the evolving needs of manufacturers across a range of industries.
“We are excited to pursue an aligned value creation strategy with the AFC team,” Jeff Drazan, the managing director at Bertram, said at the time.
If anything, however, that turned out to be an understatement.
In just more than 24 months in Bertram’s stable of companies, AFC completed another 11 acquisitions, including six so far in 2023 alone.
The distributor began its accelerated M&A efforts by adding Iowa custom tool manufacturer Cline Tool in the fall of 2021, purchased New Jersey’s AALL AMERICAN Fasteners just before the end of the year, and added two more companies in the beginning of the next year: Southern California’s Askew Industrial and Oregon Bolt.
In the fall, AFC acquired Pennsylvania’s Champion Bolt, and in just the first six months of this year, it acquired Motor City Industrial and its fastener subsidiaries, fellow Michigan company PF Markey, Texas’ QFC Industries, British rubber sealing products distributor EAP International, New Jersey-based Fastbolt, and Iowa's White Distribution and Supply.
“Whenever we can add experienced and talented people who are already aligned with our culture,” AFC CEO Kevin Godin said in the announcement of the Motor City acquisition, “good things happen.”
AFC, meanwhile, is not the only distributor under Bertram’s wing to see expansion of late: construction supplier NEFCO has added two new locations and a pair of companies – Massachusetts’ Newman Associates and Arizona’s Southwest Fastener – since Bertram made an investment in the company last August.
