Since 1981, the AD buying and marketing group has been a one-owner entity starting with the late David Weisberg’s foray into the electrical distribution realm and continuing on since 1991 with his son, Bill Weisberg, the current chairman and CEO of the organization, building it into a business that today has more than $37 billion in annual sales across seven industries (Plumbing, PVF and HVAC being three of them) in three countries. In August, Bill Weisberg announced a landmark shift for the group, as it completed the planned transition to being owned by the group’s member distributors. Weisberg recently chatted exclusively with Supply House Times on a number of topics, including the succession plan and what it means for the group heading forward.
How long has the ownership transition been in the works?
BW: We’ve been working on various aspects of our succession plan for the past five years by strengthening our management team and structure, developing our people, refining our multi-divisional governance processes and enhancing our culture. We started with the things you need to build or put in place to ensure any business has a solid foundation. Then, in the fall of 2017 I went to the AD board and recommended it was time for us implement the rest of it. We had a great new CFO in Drew Moyer, a solid and stable management team, a strong board, a law firm with adequate resources and solid operating results. We were in a good place to devote the time and effort a transition of this magnitude would require.
Succession planning had always been something we talked about as part of our board discussions. Our board doesn’t shy away from important topics, no matter how sensitive. I started with AD when I was 27 and became CEO at 35. When you get into your 60s, it’s time to make concrete plans. When you’re young you put virtually all your effort into growing the business and making sure it’s successful. As you get older you start thinking more about what comes after you. And personally, I felt a strong sense of responsibility to our people, our members and our suppliers to ensure AD was not dependent on me or any one person and on making sure it was built and structured to serve all our stakeholders for years to come.
How has the reception been from AD member distributors and suppliers?
BW: It’s been terrific — extremely positive. We put a ton of effort into it, of course. There was a solid year of planning at the board level and almost six months of rolling it out. We did road shows, webcasts, the whole shooting match. AD is important to a lot of great companies and people. And we were able to show them that with member ownership and the governance and corporate structure we were putting in place that we would be able to continue to serve them and perform at a high level. Their response has been incredibly gratifying. And the results bear this out. We now have more than 500-member owners representing 95% of our business.
In your estimation, based on how AD has operated over the years, is this really a drastic shift?
BW: In some ways its business as usual, but in other ways it’s very different. Philosophically, it’s not that different from our historic approach to governance. Even though AD has always been owned by a single individual it’s never been operated like it was a sole proprietorship. We’ve operated like a co-op both in terms of financial structure and governance from day one. We’ve always had a board of directors that was predominantly members and member committees. And we collaborated through consensus with those governing bodies on policies and key decisions. So, there are aspects of this that are similar to past practices. But AD’s ownership structure has definitely changed. What we once did voluntarily now is a matter of legal requirement. It’s one member, one vote with member election of directors, officers and committees. The board’s fiduciary responsibilities are now, very clearly, to our owner members. And we’ve dealt with the formal aspects of transferring ownership. Prior to this, if something were to have happened to me unexpectedly, there were important details not in place or locked down.
You have 96 people working on the AD corporate staff and another 150-some people across the world building content for your digital platforms. How has AD been able to build a talent base of that scale?
BW: Our scale comes from operating in multiple industries and countries. That’s a very important part of our strategy. If we only operated in one industry, there’s no way we could cost-effectively deliver the programs and services we do. Buying and marketing groups are cost centers, not profit centers. Every buying group, including AD, must tightly manage its expenses. If a group’s members want new programs and services, the group needs a way to pay for them. That’s why, over the years, seven different buying cooperatives have merged into AD. Some of these were groups that we competed with, some were in new industries. They each concluded that in order to bring their members the services and support they wanted, they were better off being part of the AD family. Together, we can have staff working in areas such as procurement, HR, e-commerce and marketing and do it economically. Scale can be very effective. We collaborate and share costs.
You are continuing as AD’s chairman and CEO. Any retirement plans on the horizon?
BW: A number of people have asked me if I am leaving now that the ownership has transferred. I tell them, “not to my knowledge (laughs).” I love what I do, I’m still fired up and I have things I still want to accomplish. I don’t have a hard date in mind, but I am paying attention to my energy level and my ability to execute effectively. I’m not going to overstay my welcome and there’s no doubt our board would be very candid with me if they thought I was.
What are you most proud of during your time at AD?
BW: The positive impact we’ve had on so many people and companies. We have a great culture here. I work with great people and we deliver real value to lots of great members and suppliers. People that aren’t in business don’t understand how gratifying it can be to build a business and to serve others through that business. It doesn’t have to be dog-eat dog. It’s doesn’t have to be the way that they portray it in the movies. You can compete hard and win and still do it right.
What’s on the horizon for AD?
BW: We’ve been taking it one step at a time for 37 years now. Everything has been very organic with one thing leading to another. If you do a good job, people give you another job to do. That’s why execution is so important, as is strategy. We grow so we can add services. We add services so we can grow. We’ve done six startups and seven mergers over the years and there are several buying groups with whom we are currently in discussions. So, I see solid growth for us in the years ahead, both in terms of our footprint and in terms of our range of member services. Single-industry groups will always be around. There are a lot of good ones out there with great people running them, but I suspect we will see more of them choose to become part of the AD family in the years ahead. At the end of the day, it’s all about helping independents stay independent and win.