Dunleary acquires two chemical distributors, prepares new brand

TOWSON, Md.—Dunleary Inc., a super-regional specialty chemical distribution company based in Towson, is acquiring two chemical distribution firms, bringing together multiple chemical markets under one roof.

Dunleary has agreed to buy D.N. Lukens Inc. of Westborough, Mass., and D & F Distributing Inc. of Dallas, with a closing expected near the end of August. Terms of the deal weren't disclosed.

The combination will create a new entity, currently listed as Dunleary L.L.C., that will roll out a new brand identity later this fall, Dunleary CEO David Behan said. Combined, the companies cover chemical markets including coatings, adhesives, sealants, elastomers, plastics, construction, food, personal care, cosmetics, graphic arts, oil and gas, rubber and textiles.

The territories for the companies don't overlap much, but those in ownership at each have known one another for more than 20 years, Behan said.

"So as we watched the market evolve and saw how things were playing out over time, we've talked over the years about potentially doing something together one day. And then one day became July 12," Behan said.

As company leadership watched the markets, the move looked more beneficial as the industry has followed a general trend toward consolidation over the last 15 years. As the number of distributors has gone down, suppliers have relied more on super-regional and multi-super-regional companies to step up and handle orders for a third to half the country, he said.

Also, bringing the companies together creates new economies of scale from client to employee, keeping technical and marketing talents together under a slightly larger roof. It allows the company to use its scale to accomplish goals like spending more on new investments. That will allow the new company to focus on the salespeople in the field, strengthening its presence in each of its geographies across 28 states, Behan said.

Dunleary said the combined firm will attend to 4,400 current and potential customers.

"Our goal is not necessarily to become a national company, but to be a very strong presence in each of our markets," he said. "To remain a viable distribution entity, I do think offering more geographical scope is appealing to the supplier base. I'd say the consolidation trend is certainly pushing that."

Besides already being on friendly terms with D.N. Lukens and D & F Distributing, another important part was finding partners that already had a strong sales presence similar to Dunleary's, Behan said.

"You can cover the East Coast with three or four people if you wanted to, but in our case, we might have 21 people covering it," Behan said. "It's just that customer intimacy that we're after. Our suppliers want us to be in front of the customers in the laboratory, and that's where we spend our time."

To do that well with multiple accounts, it takes multiple sales people in the field, Behan said, especially with the extended sales cycle of months to years for specialty chemicals.

Expansion and reorganization

Currently, the combined company has 58 employees among all three smaller entities. Of those, 29 work in sales. At the outset, "the goal is to grow into the current team that we have," said Behan, but current suppliers already have expressed interest in expanding responsibilities after the acquisitions.

"Ideally, we would hold onto everyone, and start adding people as we see fit," Behan said. Some employees could be repurposed where redundancies are created by overlap. "The hope is that we don't have to do reductions whatsoever."

Dunleary's Towson office, based near Baltimore, will serve as the headquarters for the new company. Both D.N. Lukens' Westborough and D & F's Dallas offices will remain operational to maintain close relationships with regional customers and for resources such as inside sales support, accounting data, analytics and HR.

"It's very important to us, especially keeping customer service and inside sales support local, so the customers who have grown accustomed to working with D.N. Lukens and D & F personnel will have that same connection," Behan said. "The sales team is going to stay embedded as a great asset and resource. The inside sales in our business sometimes have more interaction with our customers than even our sales team do, because of the order patterns."

Ideally, the Westborough and Dallas offices will be working independently in customer service and developing their markets, but focused collectively within the company, Behan said. The executives from each team will be staying in their respective offices.

"I think we've watched some folks make a mistake in trying to consolidate into one location, and you end up losing great relationships with customers," Behan said. "We'll be staying strong in the regions we're in and not trying to consolidate everything to a home office. That's part of the regional presence we want to maintain."

The new management team will combine leaders from each of the companies, some in new roles. Behan will serve as CEO. John Lukens, a key principal for D.N. Lukens, will be chief operating officer. William Chestnutt, former Dunleary vice president, will be president of the new company. Julia Williams, who was D & F Distributing's president, will serve as executive vice president. Jeff Palumbo, who was vice president of sales at D.N. Lukens, will hold the same position for the combined company. Steve Hightower, D & F's CEO, will be chief technology officer.

Dirk Plas, coming in from outside all three companies, will serve as vice president, principal relationships and development. Plas was president and CEO of BYK USA Inc. for the past 14 years.

"For us, that's a phenomenal success to have him," Behan said. "He's a very nice capstone for us getting together."

The company has a new brand identity ready to work with, but rollout has been delayed while all three smaller companies come together. The established brands still resonate with customers, and making the change to a larger company with new information and resources in addition to handling a new brand could be too much at once, Behan said.

After a short time to get accustomed to working together, toward this October, the new brand will be unveiled and pushed out through the new company, bringing all three together.

"I think that's why the new brand identity would be helpful, so it shows that it's not just Dunleary trying to cover more geography. It's a brand new story to tell," Behan said. "I think it's time to take our name and the others, and give it something energetic and different."