Zeller Corp. Grows Again With Another Acquisition
Controls and automation products distributor Zeller Corp. this month announced the company’s third acquisition in 15 months. R-C Controls Inc., which specializes in distribution, manufacturer representation and integration of motion control components, is Zeller’s latest acquisition. The deal is part of Zeller’s effort to round out its offerings since the company was purchased from the Zeller family in 2001.
Zeller has purchased R-C Controls’ three businesses, two of which will be folded under the Zeller name including the company’s selling arm, A&D Devices Inc. But R-C subsidiary RCS Automation Inc. will take the R-C name in order to maintain its name recognition, which Zeller president Gary Haseley said was an important factor in the deal.
Through the deal, the amount of which was not disclosed, Zeller will add roughly 200 accounts, including some 30 major accounts, to Zeller’s existing client roster of 1,000.
But Zeller officials say the additional accounts will do little to boost revenues immediately. Instead, it is R-C’s expertise and the potential to leverage its affiliation with manufacturers and customers that spurred the transaction.
Company officials said the addition of R-C is a strategic move that will not only complement Zeller’s current offerings but allow Zeller to unify its newly acquired operations under a new rebranding effort organized by Archer Communications Inc.
Last year, Zeller purchased Rochester-based Vertical Solutions Group Inc. and Syracuse-based Enviromation Technologies Inc. to form what is now VSG Enviromation.
Founded in 1992, Enviromation Technologies specialized in water, wastewater and landfill monitoring systems to municipalities, as well as large air cooling systems for industrial customers. Vertical Solutions was purchased two months after Enviromation. Both companies were full-service process control systems providers and strong competitors in their industry. Since the companies merged, VSG Enviromation has helped accelerate the work Zeller does overseas.
An example is a job Zeller did at King Fahd Airport in Saudi Arabia, where a Zeller field engineer was sent to oversee the implementation of a control panel for an HVAC system manufactured by Syracuse-based Carrier Corp., one of Zeller’s customers.
As part of the R-C acquisition, Zeller will retain all of R-C’s 10 employees and centralize the company’s Linden Avenue operations at Zeller’s Cascade Drive offices this month.
R-C vice president Jeffrey Rutner formed R-C Controls with R-C president Raymond Coller some 25 years ago, when Rutner left his 11-year career as design engineer at Xerox Corp. At the time, Coller already had begun A&D Devices. Rutner said he and Coller are excited about the deal and the opportunity the company now has to leverage Zeller’s broad-based design to develop more complete customization and integration options to customers.
“This was our little motion control baby, and now it’s growing into a big kid now,” Rutner said.
As a result of the deal, Zeller’s staff now totals 100 spread over the company’s locations, which include Rochester, Syracuse, Toronto, plus sales offices in Boston and Albany.
The firm has grown since 2001, when Zeller’s staff totaled 62. Over the three years prior to the 2001 buyout, the company’s revenues climbed from $24 million to a little less than $32 million, while its employment base grew from 40 to 62, more than half of whom were engineers. This year, company officials said Zeller is on track to achieve $50 million to $55 million in revenues.
Today, engineers continue to make up approximately 60 percent of Zeller’s work force; roughly 50 percent of the company’s total revenue involves value-added engineering projects. In 2001, Gary Haseley and Paul Galioto led a team of five company officers to buy Zeller from its second-generation owner Eric Zeller, whose father, Henry, started the firm in 1961 as Zeller Electric, a general line electrical distributor.
In 1986, Eric took over the company as sole shareholder. In 1990, he and Galioto formed Zeller Electric of Buffalo. Galioto originally had joined the company in 1988, moving from vice president to president and finally CEO after the 2001 buyout.
In the 1990s, as technology continued to evolve, Zeller Electric began integrating value-added projects, partnering its electrical engineers and technicians with its customers to develop scalable products and services in automation controls.
In 1998, Zeller Electric bought Victor-based Vordex Controls Inc. and Toronto-based Control Digital Inc., which gave Zeller an edge in motion control and machine vision inspection systems, both of which led to the start of a new division at Zeller, Zynergy Solutions.
That same year the company opened Zeller Electric in Syracuse, and formed Zeller Corp.-the parent company of the Zeller Electric branches and Zynergy Solutions.
In 2001, Haseley and Galioto closed the deal to acquire Zeller along with three other company officials. The two men own an 80 percent stake in the company while the remaining partners, some of whom have changed since 2001, own a 20 percent stake.
Today, Haseley and Galioto continue to capitalize on Zeller’s engineering expertise and are working to expand it as more companies scale back their own work force and seek out the kinds of design, manufacturing and assembly services Zeller offers.
Based on current revenue and growth trends in the market, Haseley and Galioto said they expect Zeller to exceed $100 million in revenue in the next three to four years.
Reprinted with permission of the Rochester Business Journal.