A Taste For Acquiring

“As a result of any acquisition, we gain the benefit of experienced employees who know everyone in the community,” said J. Randall (Randy) Thompson, president and CEO of ThompsonGas (Hagerstown, Md.). “Customers want to do business with those people. So we see these employees as a tremendous part of the business asset, and we seek to keep them engaged and on-board. We feel that makes a huge difference in our business model.”

Thompson mentioned Bill Mayo as an example of one of those employees. Mayo worked for Suburban Gas in Alabama and became a ThompsonGas employee after Thompson bought Suburban Gas in 2006.

“He’s still with us,” Thompson said of Mayo. “He’s managed branches, and right now he’s a full-time salesperson. He’s proud of the company and works hard growing our customer base in Alabama.”

Acquiring propane businesses has been a big part of ThompsonGas’ history. The company in 1982 bought People’s Gas (Brunswick, Md.) for under $17,000. Randy Thompson was in middle school at the time, but he remembers that People’s Gas was a ThompsonGas cylinder exchange customer before offering to sell the business to ThompsonGas. Thompson’s father, Jim Thompson, owned the company at that time, and ThompsonGas specialized in selling appliances. Randy Thompson’s grandparents, Lloyd and Dortha Thompson, started the company in 1946.

When Randy Thompson took over as president and CEO in 1996, the company had one location, 10 employees and three bobtails. He found himself spending most of his personal time tending to business matters.

“In order to spend time with my family, I needed to grow the business and hire talented professionals,” he noted. “The quickest way to do that in a mature industry like propane is to acquire companies, and that’s what we started to do.”

Later that year, the company purchased Baker & Russell in Shippensburg, Pa. The acquisition doubled the size of the business, and ThompsonGas became a multi-branch company. ThompsonGas later sold Baker & Russell to Columbia Gas, which is now an AmeriGas company.

ThompsonGas in 1997 entered the West Virginia market with the acquisition of Ramey’s Inc., an appliance and furniture store. ThompsonGas invited Ramey’s Inc.’s owner Roger Ramey to remain with the business on a contract basis.

“He called all the customers who had done business with him for 50 years and said, ‘We’re now selling a new product, propane, and we’re local. You’ve bought all your other stuff here, why not buy propane?’ We were very successful in that endeavor. That’s one of our largest branches today, and it started with zero customers.”

Then in 2003, Thompson said his company “stretched our tents, if you will,” and bought Regions Propane, with locations in Alabama, Georgia, and Tennessee.

“That’s when we really started to gear up,” he noted. “Shortly after that, we bought Suburban Gas in Bessemer, Ala., and that was a very large acquisition for us. We’ve been successful in engaging banks to support our management team all the way.”

Acquiring companies has worked well for ThompsonGas, which has purchased 18 companies since 2006. But Randy Thompson is clear in stating that acquisitions take energy and perseverance. The process can take many months from letter of intent to final acquisition.

“A lot of documentation must be reviewed. It’s a tedious process. You need to have tenacity to see it through to the end.”

While all that acquisition work is going on, ThompsonGas also sells a lot of propane — providing product to the residential, commercial, agricultural, and autogas sectors — and serves approximately 190,000 retail customers from more than 51 service centers throughout the United States. It also operates a propane rail terminal in Baltimore (shown on cover) that serves independent dealers and multi-state marketers in the Mid-Atlantic region.

Although acquisitions, organic growth, and customer retention continue to be ThompsonGas’ main focus, Randy Thompson notes the company “keeps its eye on the future of energy in America.” ThompsonGas works frequently with Roush CleanTech, traveling on sales calls with Roush to sell propane vehicles to entities such as school districts and airports. “We’re not the exclusive propane supplier for Roush, but when they need a fuel supplier, they often call us in, and we’ll give quotes to the customer.”Additionally, this past July, ThompsonGas was named the propane cylinder exchange provider for six alternative-fueled lawn mowers for the National Mall and Memorial Parks (BPN, August 2013, p. 20). The deal was in the works as the propane industry’s Propane Days event approached in June. Campbell’s Bottled Gas (Manassas, Va.) is a recent ThompsonGas acquisition that Randy Thompson said has a big presence in the Washington, D.C. area, providing propane to various government entities.

“That’s how we got our foot in the door,” he said. The National Mall will use several thousand gallons of propane per year to fuel the lawn mowers.

“It’s not a huge account, but it’s all about the public relations,” referring to the fact that thousands of people visit the National Mall every year.

In addition to working to grow his propane company, Thompson works to promote the industry at the national level. He spoke to BPN during a break while attending an August executive committee meeting for the National Propane Gas Association (NPGA). He also serves as chair of NPGA’s Governmental Affairs Committee. The group at the executive committee meeting worked on strategies to extend the current 50-cent-per-gallon tax credit and the 30% infrastructure tax credit for propane engine fuel. The committee also focused on issues such as the OSHA crane rule. Regarding the engine fuel tax credits, Thompson noted the committee hoped for a budget deal in Congress to extend the credits, but that did not look likely at press time in August.

“We’ll have to change gears and work on getting the tax incentives extended for another year.”

Thompson has taken a leadership role in his company and at the NPGA committee level, and he sets high standards for emerging leaders at ThompsonGas. He follows the “4-E’s” of Thompson leadership, which are the personal “energy” to welcome and deal with the speed of change; the ability to create an atmosphere that “energizes” others; the “edge” to make difficult decisions; and the ability to consistently “execute.” Thompson learned about the 4-E’s from a General Electric leadership program he attended many years ago.

ThompsonGas leaders must possess the talents illustrated in the 4-E’s. If not, they don’t last long at the company. The “edge” to make difficult decisions is an important leadership attribute, Thompson added.

“You need to have the intellectual capital and capabilities to make reasoned, sound business decisions. If we have managers [who] consistently demonstrate this aptitude, then they will excel and continue to grow in the business and be given opportunities. If team members don’t make good choices, we make personnel changes swiftly.”

ThompsonGas’ focus on acquisitions should ensure the company’s continued growth, though its goals are ambitious, Thompson said. He looks for his company to become one of the top 10 U.S. propane providers in the next three years, up from its reported position of No. 16. That will require the company to triple in size. “It’s much more difficult to grow exponentially when you get to a certain scale than it was when you were a one-store company. It takes more or bigger acquisitions to do that.”

Thompson said his company structures acquisition deals in various ways.

“Some people want to exit the industry, and some want some liquidity out of their business,” he stated. “A lot of people stay with us for many years after they sell. We still have original employees from all of our acquisitions.”

Benny Gay is one of those employees. A former manager at Cooperative Propane in Alabama, Gay became a ThompsonGas employee after it acquired Cooperative in 2011. He runs a region of the ThompsonGas business in Florida and southern Georgia. But Thompson notes that Gay became adept at acquisition integration after ThompsonGas acquired his own company. Gay and his team now specialize in meshing acquired businesses and new employees with the ThompsonGas model.

“He’s very meticulous and calm,” Thompson said of Gay. “Anytime you buy a business, there’s a lot of anxiety with the employees. It’s change, and change causes anxiousness. Benny is very good at saying, ‘I’ve been through this, these are good people, and they’re going to take good care of you.’”

—Daryl Lubinsky