The company has been around the block, starting with a bunch of independent reps who formed one umbrella organization, which was acquired by the giant IT/CE distributor Ingram Micro, which itself was acquired by Chinese conglomerate Tianjin Tianhai earlier this month, which divested AVAD right away to the private equity firm Kingswood Capital Management.
So here we are.
What does it mean for AVAD that it’s now owned by Kingswood?
“It means it’s an independent business that needs to earn a profit,” says Tom Jacoby, newly appointed chairman and CEO who formerly was CEO for Harman Consumer Group. “It has investors. They expect a return on investment. There’s no particular time constraint.”
It’s as simple as that, he says. There are no plans to sell off assets, as often happens when private equity takes over.
The only certainty, he explains, is to “take an asset with very good bones that has underperformed, and add resources to evolve its strategy.”
AVAD isn’t ‘Broken’
Jacoby was invited last year to take a look at AVAD and was “delighted with what I discovered,” he says. “There are fantastic people in the business. We need to change processes and modify the business model, but it’s really all about the people.”
With the strong human-resource elements intact, Jacoby and new AVAD president Fred Farrar concluded, “We don’t see this as a broken company that needs to be fixed, but an underdeveloped business with a legacy business model that needs to evolve.”
The missions of AVAD and Ingram Micro were “not perfectly aligned,” Jacoby says. Ingram distributes a very high volume of a wide assortment of electronics, whereas “AVAD was then and remains a business focused on specialty markets. It’s a much higher-touch model.”
Even under Ingram’s rule, however, AVAD “really maintained a remarkable degree of integrity as it relates to the core business — of understanding products and how they go together. They just did it in a very analog fashion.”
As such, AVAD’s evolution will come largely from improvements in logistics and IT. Customer service, transactions, training and virtually everything else AVAD touches could take better advantage of modern-day digital tools.
For example, AVAD has access to all the right data concerning products in stock, on back order, and all the rest of it, but the data is not readily available to customers through a dealer portal.
Similarly, “a lot of training and customer interaction is still delivered in a traditional way – person to person,” according to Jacoby. “We only have 23 outlets. You can only touch so many people. It’s a big place, North America.”
More Locations and other AVAD Moves
Jacoby says AVAD plans to extend the company’s reach but stopped short of saying the distributor would open more “branches” per se.
He notes that AVAD customers really appreciate the value of picking up products from branch locations, but “that’s a service we’re not providing in as many places as we possibly could.”
AVAD does plan to “add market reach,” Jacoby says, but the company doesn’t know exactly what form that will take.
“We have many customers who aren’t in the position to handle inventory,” Jacoby says. “They want it as close to the job and the time as possible. Our challenge is to do that efficiently without consuming vast amounts of capital.”
Besides AVAD’s focus on “logistical excellence,” the distributor will take a look at the product mix.
The commercial business has done particularly well for AVAD lately, along with the wireless audio category. On the automation front, lighting, HVAC and whole-house control have been strong.
The question Jacoby tends to get is: “Is your market still relevant?”
The long-ago emphasis on structured wiring has given way to wireless everything and “the world is completely enthralled with the internet of things, whatever that means,” Jacoby says.
But the fact that “everything is trying to compete on Wi-Fi networks that were never equipped for it,” Jacoby says, represents a big opportunity for integrators.
So yes, the home-tech install channel is not only relevant but energized, Jacoby says: “We’ve met so many folks that have been with AVAD for a long time. There is a passion for the business, in fact a lot of pent-up energy.”
All that energy will be on display for the first time in five years at CEDIA 2016.
“It’s important for AVAD to participate and interact with our dealers at key industry events,” Jacoby says. “AVAD’s goal is to provide our customers with exceptional service that’s un-matched among competitors and we understand that the foundation of that service is through conversation.”