Key Takeaways

  • Winsupply closes roughly 90% of its transactions entirely without earn-outs, avoiding post-close friction and complex accounting disputes.
  • Greg Holbrock's four-person M&A team manages acquisitions across 680-plus wholesale locations while maintaining an 80%-plus deal success rate.
  • Winsupply integrates tech stacks at what Holbrock calls "local speed" instead of forcing Day 1 enterprise software migrations.
  • When back-office functions migrate to central platforms, back-office staff are repurposed rather than automatically eliminated for quick margin expansion.

The Friction of Earn-Outs

Private equity roll-ups frequently rely on earn-outs to bridge valuation gaps in fragmented distribution markets. Buyers treat contingent consideration as a hedge against downside risk, but it often creates immediate operational conflict. The seller watches every allocated cost, corporate overhead fee, and cross-selling initiative through the lens of their short-term payout window.

Winsupply takes the opposite approach. Across its portfolio of more than 680 wholesale distributor locations, the company closes approximately 90% of its deals with clean, cash-based structures.

“I think that earnouts can complicate a deal,” (play from 41:45) Holbrock explains. “I think sometimes you can over complicate it by making things too egregious. I would say 90% of the time there's no earnout. Earnouts are rare.” (play from 41:47)

By pricing the business outright and eliminating deferred targets, Holbrock avoids running an acquired business under the shadow of a legal dispute. Deal certainty replaces deferred earn-out mechanisms. If a target requires a complex clawback or performance hurdle to justify the purchase price, Holbrock's view is that the deal simply lacks genuine alignment from the start.

Integration at Local Speed

The standard private equity playbook treats Day 1 system integration as non-negotiable. Sponsors rush targets onto a common enterprise software stack to consolidate reporting, standardize inventory tracking, and cut accounting heads. In practice, forcing legacy distributors onto unfamiliar software often leads to inventory errors, broken billing cycles, and customer churn.

Holbrock deliberately delays ERP consolidation when a target already runs reliable systems. “We will integrate companies at the speed at which we need to go, and I'll call it local speed here,” (play from 11:02) Holbrock says. “If you're looking at companies to acquire and they're on a sophisticated system and you got reliable data, you can trust the financials that are coming out. I don't have to convert them to our ERP as quickly.” (play from 11:10)

Leaving functional software untouched protects customer relationships. It also reframes the accounting playbook. In standard roll-ups, back-office consolidation functions as an immediate source of cost reduction. Holbrock takes a different stance on redundant personnel.

“The true synergies on deals for Winsupply is when you leave a team in place after you do a deal,” (play from 51:05) Holbrock says. “When we convert to our ERP system, we don't necessarily let people go. What happens is a lot of times these people are repurposed.” (play from 51:24)

Rather than harvesting immediate margin through severance, local leadership redirects those workers into branch operations, inventory management, or sales support. Eliminating friction at the customer counter takes precedence over rapid overhead cuts.

Why It Matters

Winsupply demonstrates that the conventional roll-up playbook of rapid back-office elimination and heavy contingent consideration is not the only path to scale in fragmented industries. In distribution and trade businesses where customer retention rests on branch-level relationships, aggressive Day 1 platform consolidation often destroys more enterprise value than it creates in overhead savings. Clean purchase prices combined with operational patience prioritize terminal value over short-term margin harvesting.