Forming Tipco 2.0: Tipco Technologies, HydraTech partnership built for growth

OWINGS MILLS, Md.—When rubber goods distributors Tipco Technologies Inc. and HydraTech Industrial Solutions came together as one company late last year, Rob Lyons dubbed the combined business as Tipco 2.0.

The merger actually came together in several simultaneous steps that ended with the merged firm—which will operate under the Tipco name—being owned by Denver-based Platte River Equity, a PE firm that focuses on industrial sectors where it feels its principals bring "unique experience, relationships and insights."

One part of the deal saw Platte River buy Owings Mills-based Tipco Technologies, which called itself the "Mid-Atlantic's leading fluid solutions provider." The distributor boasted 12 branch networks and three production facilities across five states.

The company's history dates back to 1888, with Lyons' parents taking ownership in 1982 and the business transferring to Rob Lyons and his sister, Terri Lyons, in 2001.

Part two saw Platte River acquire HydraTech from PE firm JMH Capital. JMH had helped Brad Marshall build the business from 2019 to late 2023 first with the purchase of Alternative Hose and then through six additional acquisitions. HydraTech brought 15 branches across eight states, including supporting counter, OEM and MRO customers, to the combined operation.

And the final step saw Platte River merge Tipco and HydraTech together under a Tipco Technologies platform that had 30 locations across 15 states, before adding one more site with the April 2 purchase of Hose of South Texas.

Tipco 2.0 has Rob Lyons and Marshall as co-CEOs, with Rob Lyons leading the commercial business and Marshall head of operations. Terri Lyons serves as vice president of Tipco Technologies Mid-Atlantic.

"It was incredibly unique," Rob Lyons said. "It was a heavy lift to get to the finish line. Platte River Equity has a growth mindset and they have the capital for Brad and I to go reach out to potential partners in this endeavor, and that was important to both Brad and I that we would have the ability to grow our platform as quick as possible."

With M&A being active in the rubber goods distribution market for some years, Lyons said Tipco's been cherished by a lot of different groups over time—be it private equity or strategic—looking to make the family the proverbial offer it couldn't refuse.

He had breakfasts and lunches and dinners with countless potential suitors, many of them carrying the same message. But whether it's designing a "super store" concept for a new Tipco location or listening to pitches to buy his family firm, Lyons likes to hear "out of the box" thinking.

"We'd been approached aggressively and my response to all the suitors was, 'Just be different,' " he said.

He and Marshall became acquainted when both served on the board of the Industrial Distributor Co-op (IDCO), a group purchasing organization for independent distributors that supply the industrial community with hose, fittings, gaskets, rubber materials and related products. They got to know each other through IDCO and developed an admiration for each other professionally.

Marshall then reached out to Lyons on behalf of HydraTech, and they pursued the possibility of coming together.

Lyons said from Tipco's perspective, there were three items of vital importance.

"What mattered most was the young talent that existed in our company," Lyons told Rubber News. "I feel like we're ripe with young talent, so that was an asset. And I wanted those folks to have a clear opportunity to grow their careers and their incomes."

Second was that the Tipco name moved forward. "I felt at this stage that Tipco Technologies was a brand that could stand on its own two feet and across the country. So that was important to me," Lyons said.

And the last piece to discuss was what was the right thing for the Lyons family. Terri Lyons has a son involved in the business, while Rob Lyons has two children, but they haven't joined the family business to this point.

So they had to determine what was the right thing to do for the family as the second generation ages out at some point.

As discussions went further, they found that the Tipco/HydraTech deal made sense, but with one caveat: Lyons and Marshall were concerned that the M&A opportunity might outscale JMH Capital's ability to fund future purchases to help Tipco 2.0 grow over time.

They were very upfront with that concern, Lyons said, and that led to the involvement of Platte River.

Marshall had a history with Gates Corp., where he started a new division helping the Denver-based rubber products firm set up a distribution network, much of it through acquisitions in the Middle East and Southeast Asia, areas where it didn't have much coverage at the time. While it was owned by Gates, it was run more like an entrepreneurial business. That was followed with a stint at Microsoft, which was hiring people from industry to instill more of a digital vision to major manufacturers.

After two years there, Marshall was contacted by JMH Capital about doing what he did with Gates, but in the U.S.

The first purchase for what would be the PE firm's HydraTech platform was Alternative Hose L.L.C., which brought locations in Arizona, Idaho and Nevada. The timing was a bit auspicious, coming in October 2019, not long before the COVID pandemic took hold, and put a bit of a damper on the M&A market for awhile.

But four years and six more acquisitions later—bringing them to 15 locations—brought HydraTech to the point where Marshall was able to partner up with Lyons and the team at Tipco.

In building up HydraTech, Marshall followed three main principles.

"Our guiding focus was all about people, No. 1. That we provide a great work environment and opportunity for those people to develop," he said, "because this business is all about the team.

"No. 2 was growth, that we have a growth focus. That was a little PTSD coming out of Gates, where we lost our growth focus. And No. 3 was partnerships. That started with partnerships with the owners, partnerships with our strategic suppliers and then partnerships within our communities."

When Marshall met Lyons at IDCO, he had known of Tipco before, but this gave him the chance to know more about him and his company. And to say he was impressed would be an understatement.

"He's a commercial savant as far as branding, marketing, strategic suppliers. The organization of the 'go to market,' " Marshall told Rubber News. "That is something you know that is very unique in this industry. Very few companies you know have done what Rob has accomplished with Tipco on the commercial side."

Marshall thought back to 2020 when IDCO put a proposal to its members to implement an E-commerce strategy. But during that time, he said HydraTech, like many other firms, couldn't see around the corner, let alone pull the trigger on such a large investment. He passed, while Lyons and Tipco went forward.

"Rob and Tipco ended up years ahead of the market," Marshall said. "And the maturity of what they've done from an E-commerce and digital perspective, compared to companies like HydraTech and others that were looking at the same time and didn't act—we're years behind Tipco."

And with the co-CEO model, Lyons will be able to focus on the commercial side and Marshall will take the reins on operations.

"I think we're 100-percent aligned on the commercial model and let's use that as the foundation going forward," Marshall said. "And then let's also look at our work and this co-CEO model and say, 'Rob, just focus on commercial.' That's what you know and has driven Tipco to this point. And I'll continue to drive M&A and support on the operations side."

From Platte River Equity's view, they had met Marshall in the past, but at the time it was too small for the firm to consider, according to Peter Calamari, a managing director with the PE firm. But they were impressed with him as a leader and when HydraTech grew to the point it had, and with the opportunity to expand with Tipco, that was the time for Platte to re-engage and help the two distributor groups come together in a market where they saw opportunities for growth.

"You know, we were kind of blown away with the quality of Tipco as a selling organization, as a forward-thinking company around employing digital technologies and tools to grow the company," Calamari said. "We were really impressed with how Rob led the sales team and drove the sales organization to really focus on winning market share, but more importantly in serving the customer as well. ... I think to us, this is really a foundation that we can build upon and expand it across many more geographies."