Sterling Consolidated Corp., a seal supplier based in Neptune, New Jersey, has bought F&S Distributors, Inc. The deal is the company’s third business acquisition since it went public, and it continues a roll-up strategy built on buying smaller rivals.
F&S is a 58-year-old distributor of o-rings in Jackson, New Jersey. Sterling is buying its assets for $900,000, paid in a mix of cash and stock. Even so, it will keep the key people at F&S, including top management and the sales staff.
The target also brings solid numbers with it. On its most recent federal corporate tax return, F&S reported $2.7 million in sales and $204,000 in net income. It also holds about $283,000 in receivables and $718,000 in inventory.
Why the deal fits
Darren DeRosa, Sterling’s chief executive, said the purchase is a clear example of the company’s business model. He described F&S as a long-standing competitor with a steady customer base, many of whom order custom parts. Because its operations sit close to Sterling’s headquarters, the two can be merged to cut overhead and gain economies of scale.
Sterling now expects total sales above $9.2 million in 2019, including about $2.7 million from F&S. If that happens, sales would be roughly 40 percent above the current level. DeRosa added that the company plans to keep growing through further acquisitions and through DiMO, a blockchain-based technology it has created.
Today Sterling operates through its subsidiary, Sterling Seal and Supply. For almost 50 years it has supplied hydraulic and pneumatic seals to the automotive and industrial markets. The company is an approved supplier to Amazon and Walmart and has five locations across the United States.
