Aug. 9—Haywood Builders Supply is changing hands, but other than new ownership, loyal customers and contractors who have relied on the business for supply needs since 1948 shouldn't notice many other changes.

As of July 25, Haywood Builders Supply was sold to Southeast Building Supply, a division of Building Industry Partners. The Waynesville location joins Henson Building Supply in Black Mountain as the second acquisition in the Asheville market.

"Our team is looking forward to continuing Haywood's decades long tradition of customer service and community involvement," said SBSI President Roger Farmer. "This is a thriving region, and we are excited to expand our ability to serve the area's builders."

Robert Gordon, a previous general manager with Builders FirstSource and 84 Lumber, has been named vice president and leader of the Asheville stores.

At Haywood Builders Supply, president Philip Dooly, whose father started the company in 1948, will be retiring after working with Haywood Builders for 49 years. Danny Wingate, who celebrated his 50th anniversary with the company the day before the sale, will be promoted from vice president to company president.

The building industry has been rife with mergers and acquisitions in recent years, Wingate explained, and Haywood Builders Supply's ownership structure as an employee stock ownership plan (ESOP) made it particularly attractive to investors. It also provided an answer to a lingering concern of the company's ESOP management team, Dooly, Wingate and comptroller Sherri Allen.

"We were a mature ESOP and all the stock had been allocated," Wingate said. "That meant no new employees could be added to the plan and that if one of us with a good chunk of ownership in the ESOP decided to retire, we'd have to borrow money to fund the retirement."

ESOP shares were allocated year after year in accordance with salary levels, and the company setup was enticing enough that the average employee tenure at Haywood Builders was 17 years.

While several offers were made to buy the company through the years, the Southeast Building Supply Interests offer was one attractive enough to bring to the employees, Dooly said.

"If we know there's an offer that's best for shareholders, we let them vote," Dooly said. "We're obliged to do that because of our fiduciary responsibilities as trustees."

Once an offer is on the table, the trustees take a back seat as ERISA steps in, Dooly said. This is the federal law that sets minimum standards for voluntarily established retirement and health plans in private industry.

After a period of due diligence, the offer was presented to the Haywood Builders Supply owners, and the vote was 99.7% in favor of selling, Wingate said. The new owners simply acquire the established business name, inventory and employees who want to remain.

The land and improvements are sold to another entity that leases the properties back to the business. In this case, Kitawah LLC, the economic development arm of the Eastern Band of the Cherokee Indians, purchased the properties. The two transactions happened simultaneously.

Current employees can roll over their earnings in the ESOP to another retirement plan, Wingate said, and if they choose to remain at the company, there will be another stock ownership option offered by the news owners.

Plenty left to do

While the business sale has been inked, there are still tasks the ESOP management team has yet to complete. First off, the new company didn't want to purchase property beyond the business footprint, so a separate company, HBS Legacy, Inc., has been set up to liquidate those properties so proceeds can be allocated back through the ESOP.

The Cherokee location was not part of the Southeast Building Supply purchase, so it has been sold separately and the proceeds from that need to be rolled into the ESOP finances as well.

"We have two timetables, one for finding an appropriate price for what's left, and two, wrapping up the ESOP," said Dooly, who will be an integral part of the process. "It (the ESOP) is an entity under IRS and U.S. Department of Labor rules and is a complicated legal dissolution. It can take up to two years."

Wingate said the new owners were looking for community-oriented businesses.

"They wanted a company that had a respected name and reputation," he said. "They want to continue the good relationship we have with our customers and the community activities we've been doing. We feel really good about this."

The sale was also an answer to the looming question facing the Haywood Builders Supply ESOP management team of how to finance retirements of long-term employees without going into debt, Wingate and Dooly agreed.

"We think our employees are going to benefit in general," Dooly said.

"And from everything we've seen and heard, the community will benefit, too," Wingate added.

Pat Mascia, partner at BIP, said Haywood is a natural fit for SBSI's growth strategy.

"We are grateful to the team for their trust in us and commitment to performance in this next phase. We strive to be the buyer of choice for companies like Haywood, and this acquisition is continued evidence of our progress towards this goal," Masica said.

Matt Ogden, managing Partner at BIP, agreed.

"Given Haywood's history of offering an Employee Stock Ownership Plan, this is an excellent opportunity to carry forward their existing culture of ownership by extending employee ownership into this next phase of the company's history," he said. "We look forward to learning from their experiences as we advance our employee ownership approach to maximize impact for all shareholders and employees."