November 6/13, 2017: Volume 32, Issue 11
By Ken Ryan
Santa Fe Springs, Calif.—Galleher, the No. 5 ranked flooring wholesaler among FCNews’ top 20 distributors with 2017 sales projected at $198 million, has closed an investment with Quad-C Management, whereby the private equity firm will take a majority stake in Galleher. Financial terms of the transaction were not disclosed.
The Quad-C deal marks the second major transaction Galleher has pulled off in the last 10 years. In 2007, Galleher sold its business to Itochu, a Japanese company, before purchasing it back in 2010. “We’ve done it again,” Jeff Hamar, president and CEO of Galleher, told FCNews. Jeff, his brother Todd, and Rick Coates, both senior vice presidents, were the three principals involved in selling the majority stake to Quad-C. Jeff Hamar called the process “long and thorough,” but in the end he said he couldn’t be more excited. “It gives us a partial exit and a lot of capital for acquisitions and growth.”
Hamar said he would remain as president and CEO and is looking forward to staying for a long time. “We continue to own a substantial part of the company, just not a majority.”
In announcing the deal, Thad Jones, a partner at Quad-C, praised Galleher for its portfolio of high-quality, innovative products and extensive experience in the industry. “We recognized the company’s value proposition with both retail showrooms and professional contractors, as well as the strength of its vendor relationships,” he said. “We look forward to supporting Galleher in the company’s next chapter of growth.”
The investment will provide Galleher with the financial strength to pursue growth opportunities both organically and through acquisitions. Galleher has been averaging 20-plus percent growth year-over-year for the past five years. “Nobody in distribution has grown like we have—it has been pretty remarkable,” Hamar said. “We have five brands now (Monarch, Reward, Royal Custom Flooring, Sequoia Carpet and Pacific Pride Flooring), which is 50% of our sales. Our manufacturing capacity is substantial. We sold in 35 states last year.”
While California was hit very hard by the 2007-2009 recession, Hamar said the state bounced back stronger than the rest of the country. Galleher’s growth spurt coincided with the state’s recovery. And now the wholesaler is looking to drive that momentum with Quad-C’s help. (The private equity firm has made prior investments in the flooring industry, including Stanton Carpet.)
“We have some ideas for acquisition targets,” Hamar said. “Would we be interested in a $10 million deal in Maine? Probably not—not for $10 million. Would we be interested in a $10 million deal in [a Western state]? That would make more sense. I wouldn’t rule anything in or out.”
Galleher’s last acquisition was back in January this year, when it acquired the production assets of the Copper Plank Custom Mill in Scottsdale, Ariz. The acquisition provided Galleher with an integrated custom engineered flooring plant and increased the number of its prefinished lines to five. The acquisition also gave Galleher the ability to produce custom solid flooring, reclaimed flooring, moldings and stair parts.
Galleher employs more than 325 people and currently operates 23 locations in California, Nevada and Arizona.