Amping up structures to prepare for the future

By Margaret Steen

The Collat family bolstered family and business structures as their electric supply business, Mayer, transitioned to G3. They now have formed a family office and are preparing for G4. 

In the late 1980s, Charles A. Collat Sr. asked his four children if they knew what it meant to run a family business.
“Being young and naive, we said, ‘Absolutely, we know what it means to run a family business and to be effective owners,’ ” recalls Charlie Collat, 53, his son.

The children didn’t really know — but they wanted to learn. So the family engaged a family business consultant to help Charlie and his three sisters learn to become good owners of Mayer Electric Supply Company.

“Of the many things that we have learned over the years, one of the most important lessons was and is how to communicate with each other,” says Charlie, who today is president of Bay Pine Holdings (the family office) and executive vice president of Mayer. “My mother’s mantra was that she didn’t want the family business to break up Thanksgiving dinner.”

At the time, Charles, now 88, was chairman, CEO and president of Mayer, which has grown to be one of the nation’s largest wholesale distributors of elec

trical products and equipment, connected solutions, digital lighting and digital tools.

Founded in 1930 and based in Birmingham, Ala., the company had three locations in two states when Charles took over in 1979. As of this writing, the company has 1,500 associates at 81 locations across 14 states and generates $1.1 billion in annual revenues.

“My dad and his management team put principles in place that we still have today,” says Charlie. “We strive to have the best associates, to have a financially strong balance sheet, to invest in technology to run our business and to have inventory close to our customers.”

Mayer was founded as The Electric Supply Co. by Ben S. Weil, the father of Charles Collat’s late wife, Patsy. During the Depression, the business went bankrupt as customers stopped paying their bills.

“Max Mayer, a man in his 70s who liked my grandfather and his business, bought the business off the auction block and saved it,” says Charlie. He changed the name to Mayer Electric Supply Co. — and Weil kept the name when, a few years later, he bought the business back from Mayer. While Mayer Electric Supply Company Inc. is the official company name, the company publicly rebranded as Mayer in 2018. 

Today, the name doesn’t just honor Mayer — it also provides a quick way to screen callers: “People will call up and ask to speak to Mr. Mayer, saying, ‘I know him,’” says Nancy C. Goedecke, 61, the oldest of the four children and Mayer’s chairman and CEO. “I say, ‘No, you didn’t do your homework.’ ”

Weil’s son, Leonard, entered the business in the 1940s. His daughter married Charles Collat, who then joined the business in the 1950s. In 1979, Weil did not see a bright future in the electrical business, while Charles wanted to expand and grow. The Weil family sold their shares to the Collat family in what is now called a leveraged buyout.

A family that is close to the business
Family involvement in the business started early. “It was very much a part of all our lives,” says Nancy. “We worked there summers and holidays. Charlie swept the floor in the warehouse, I did a lot of filing and one of my sisters answered the switchboard.”

They absorbed their father’s vision and values. “His vision for the company was to be the first choice of our customers, our associates and our suppliers,” Nancy says. “His vision for the company and family has brought us to the point where we are today.”

In order to begin the succession process, Charles turned over the president’s role to a non-family member in the mid-1990s, remaining chairman and CEO. In in mid-2000s, the advisory board members urged him to make room for a successor and to move his office away from the corporate office.

“The board basically told me to move my shadow, to make sure that the person who was running the company was not me,” says Charles, who today is chairman emeritus. He found an office nearby and moved.

“My dad literally moved out of our building — a monumental decision,” says Charlie. “My father called it ‘being put out to pasture,’ but it allowed our president to be president and my oldest sister to begin to be groomed to be chair.”

In the mid-2000s, a nationwide retailer asked Charles if he was interested in selling the business. He knew he didn’t want to sell, but he asked his children what they thought. “I figured it would be a good test to see what they wanted to do,” he says.

The children gathered with Craig E. Aronoff of The Family Business Consulting Group to talk through the pros and cons.

“We left that afternoon saying, ‘No, we really want to keep it a family business’ – realizing there was a lot of responsibility that goes with that,” says Caki Mendel, 60, director of community outreach and one of the four Collat siblings. 

“We passed the test without knowing we were being tested,” Nancy says.

As the third generation became more involved in the business, Charles’s three daughters — who were not working in the company — wanted to form a clearer connection with Mayer’s associates. Over the course of about a year in the mid-1990s, Nancy, Caki and their sister Susie Collat, now 56, visited all of Mayer’s locations — about 65 at the time.

“It was a remarkable commitment — that’s the kind of intense involvement they have,” Aronoff says.

The tradition continues today with members of the company’s leadership team visiting each branch annually.
Members of the fourth generation, who range in age from 19 to 32, are becoming more involved. As a unit, they have been meeting for about the past 10 years with their own family business consultant. Two G4s currently work in the business.

Scott D. Goedecke, 30, joined Mayer in 2016 after working in the banking industry for almost four years and has worked in internal audit, accounting and operations. He currently works in corporate finance. David Goedecke, 32, worked after college for one of Mayer’s suppliers, then joined Mayer to start and lead the customer integration team. Today he influences the company’s digital strategy and innovation as a solution architect.

“I have always had a passion for the company, the family, the legacy,” David says.

Evolution of governance
As the company and family have grown, the ownership and governance have evolved.

Today, Mayer is owned by the four members of the third generation, though they have started transferring some of the ownership to their children. The family’s real estate and other investments are also owned primarily by these four.

The family consists of Charles Collat and his second wife, Joanna; his four children and their spouses; and 10 members of the fourth generation plus two of their spouses. There are also two very young members of G5.

When the members of G3 started meeting with Aronoff, they agreed on three goals: They wanted Mayer to remain a family business. They wanted the best person to run the day-to-day operations of the business, even if that was not a family member. And ideally, they wanted a blood member of the Collat family to be chair of the board.

“We learned that family businesses often fail, not because of the business or the economy, but because of the family,” says Nancy.

Now both corporate and family governance are becoming better defined.

The unofficial advisory board Charles Collat formed when he took over the business in 1979 now consists of five outside members, plus one representative from each branch of the family.

A family assembly, which includes all members of Generations 2, 3 and 4, meets once or twice a year. The family is setting up a family council with Susie as chair, Scott as vice chair, and three other family members serving as committee chairs focused on governance, education and unity.

“We’re setting up the family council for the future,” says Scott. “As G4 grows, we can’t have all of G4 involved all the time. This council is being set up hopefully well ahead of when we will actually need it to slowly transition ourselves from an ownership group of four to an ownership group of 10.”

Technology changes the business
The business is also changing. 

“When I was growing up, we moved brown boxes,” says David. ““Over the years, we have evolved into a solutions and technology business.”

Lighting, for example, has gotten more complex.

“We have sold lights for years,” David says. “Now we sell computers which capture data and just happen to emit light. Through data analytics, we are able to help our customers gain insight into their business.”

The business now provides “smart, connected products and solutions that are integrated to enable our customers to meet their unique business needs,” says Wes Smith, the company president. “We will continue to provide traditional products, logistics, job site services, etc., but the business is evolving rapidly, and we are leading the way. In the future, we must do more things exceptionally well: traditional products and services and new smart products, systems, solutions and services that enable all of the things to work together cohesively in a system.”

A Women’s Business Enterprise
One factor in Mayer’s recent growth has been its status as a Woman-Owned Business Enterprise, or WBE. This certification, given by the Women’s Business Enterprise National Council, can give companies a boost when competing for direct government and government-funded contracts, as well as private contracts where social responsibility and diversity is a core value. WBE status is granted to companies that can show they are at least 51% owned and run by one woman or several women. Although the family didn’t set out to be a WBE, certification has been helpful to the company’s growth.

“It has sometimes pushed us over the edge when we’re equal to a competitor in pricing,” Nancy says.

The company became certified in 2005. Patsy owned 51% of the business and Nancy, though officially vice chair of the board, had taken over the leadership from her father. As the ownership moved to the next generation, the percentage owned by women increased to 75%. Nancy took on broader board and executive management responsibilities over the next few years, and she was officially named chair and CEO in 2008.

“Nancy was selected by her siblings and the board to run the company because she’s a very outstanding individual — she has led every organization she has ever been involved with, and it’s always been better when she left than when she joined it,” says Charles. “This is no exception.”

A caring family
Smith describes the Collat family as an “extraordinary family who is extraordinarily close.” This has driven the family’s community engagement, philanthropic work and responsibility to their associates and families.

“Apples do not fall far from trees, and the third generation continues the legacy of values given to them by the parents,” Smith says. “Generation 4 shares these same values.”

In the wake of the economic crisis in 2009, Mayer’s leadership took salary cuts and everyone in the company took four weeks off without pay. At the end of the year, when the company’s financial results were better than expected, the family decided to pay the employees the money they had lost because of the furlough — even though, as Smith notes, the company’s financial results were not public, so no one would have known there was enough money to do this.

The company encourages community involvement.

“One of our core values is to be a good citizen where we live and work,” says Caki. She coordinates associates throughout the company to give back in the communities in which they live and work. The company holds an annual school supply drive, for example, and a weeklong event in September where associates at each branch are encouraged to volunteer — on company time — for civic, education or health-related charities.

Charles and Patsy for decades supported numerous philanthropic and educational organizations. The Collats made the largest single gift to the business school at the University of Alabama at Birmingham, establishing the Collat School of Business. They also established Collat Jewish Family Services (now called CJFS) in Birmingham.

Looking to the future
With Charles Collat’s four children fully engaged as owners, the focus is turning to the next generation. 

“We all seem to have a sense of pride — even our children who are not in the business,” says Caki.

The business may head in new directions while staying true to its roots.

“We’re trying to keep competitive in the new information environment in which we live, and we are getting more information than we ever have,” says Charles. “But it’s no different than it was 50 years ago: If I can help you become more profitable, then you’re going to be a happy customer.”                                            '

Margaret Steen, a frequent contributor to Family Business Magazine, last wrote about the J.M. Huber Corporation.

The Evolution of a Family Office

About two years ago, Charlie Collat was working as Mayer’s chief operating officer while also working with the company’s chief financial officer to manage real estate and other investments owned by the family.

“We looked at the amount of assets under management, and we said, ‘We need to have somebody who wakes up every day and is focused on these assets,’” Charlie says.

A family office, Bay Pine Holdings, was established, and Charlie became its president. He also remains an executive vice president of Mayer, though he’s no longer COO.

The Collat family owns the real estate for half of Mayer’s locations. (The others are leased.)

“Right now, the real estate side is directly tied to the business,” Charlie says. A longer-term goal is to grow the company’s real estate holdings outside of the Mayer locations and to potentially leverage some of those holdings in order to invest in other real estate.

In addition, the family has been building an investment portfolio so that it will have some liquid assets as a safety net.

In addition to managing the investments, Charlie is working with family members to be sure their estate plans are up to date.

He is also working on the Mayer Foundation, which has been funded primarily over the last 30 years from some of the Mayer’s profits. The family assembly has formed a committee that is creating a structure for the foundation’s future, including what types of causes to fund.

“The family is in the process of creating a formal process for the third and fourth generation of the family to decide the mission and purpose of the Mayer Foundation,” Charlie says. “Currently, the foundation focuses on education, civic and medical needs, as this has been the desire of the second generation.”

The structure of the family office is still evolving. It started, says Craig Aronoff, a family business adviser who has worked with the Collat family, as “an emerging embedded family office,” unofficially dealing with a lot of the issues a typical family office would handle. Now, it is more formal, though still in some ways not as distinct an entity as many family offices are.

“As the family grows, the family assembly and family office are going to be even more important to the next generation than to us,” says Susie Collat, marketing program manager and vice chair of the Mayer board. “I think it will change with time and future generations.”—Margaret Steen

Copyright 2020 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.     

Article categories: 
Issue: 
May-June 2020

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