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Aug 18, 2023

Depatie Fluid Power Group buys two California automation firms

A Southwest Michigan hydraulic parts supplier recently acquired and successfully merged two automation firms in California. Portage-based Depatie Fluid Power Group purchased DST Controls Inc. and CKC

A Southwest Michigan hydraulic parts supplier recently acquired and successfully merged two automation firms in California.

Portage-based Depatie Fluid Power Group purchased DST Controls Inc. and CKC Engineering LLC, which were both based in California’s Bay Area. The combined firms are rebranded as CKC Automation, with executives from the former CKC Engineering staying on to lead the business.

Grand Rapids-based NuVescor Group, an M&A firm specializing in the manufacturing sector, assisted with the acquisitions and merger.

NuVescor Managing Partner Randy Rua said his team happened to have both DST and CKC as clients. The two firms had been acquainted and already worked together through some subcontracting, making the merger a “perfect fit,” Rua said.

“I always thought they should go together. I saw the fit between the two, but they were both at a point where neither one would want to buy the other,” Rua said. “It was the perfect fit for a merger, but they needed the capital to do it … that’s where Depatie came in.”

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According to Rua, the entire process happened within a couple of weeks — an “aggressive” timeline that was made easier because DST and CKC already were prepared and wanted to do a deal, he said.

“It’s a lot to have happened all together: Acquire two companies and put them together all at the same time,” Rua said. “Normally that might be really difficult, but because the two companies knew each other so well and they were already prepared for a transaction and they wanted to do a transaction, it all just came together.”

More broadly, Rua sees automation as “a bright spot” in the midst of “interesting times” for the manufacturing sector. His team has been involved in multiple bankruptcy transactions outside of Michigan just this year.

“I haven’t done that in 10 years,” Rua said, citing cost increases and lower order volumes from automotive customers as drivers behind those bankruptcies. “Obviously something is going on when I’m selling that many companies out of bankruptcy.”

Despite recent growth and activity in automation over the last several years, the industry is still fragmented, Rua said.

“There are some big players, but there are a lot of smaller players — like the two companies in California — that kind of got into (automation) over the years, and now it’s become more mainstream,” Rua said. “So, we’re seeing a lot of acquisitions in that space because people are trying to roll up a lot of these smaller players. That way, they can provide a more robust service.”

The decision to purchase the two automation firms was a natural progression as Depatie expands beyond its traditional fluid power offerings, according to Ryan Thomas, general manager of Depatie Fluid Power Group.

The deal represents an investment in the future of both California companies as well as Depatie, Thomas said.

“The two companies have long histories of success and merging them will create more opportunities for growth and broaden relationships with customers,” Thomas said in a statement. “This market is project-based and requires longer sales cycles. We believe this will provide greater balance to the overall business in the long term.”

As well, the combined strength of CKC Automation will allow Depatie to leverage the full suite of capabilities to support all automation requirements for customers, according to Thomas.

Depatie was founded in 1956 and operates as a certified Parker Tri-Technology distributor of hoses, tubing, fittings, valves and other products for hydraulic and pneumatic power needs across various industries.

The company’s headquarters and Technology Center both are located in Portage. Additional locations include Grand Rapids, Holland, Mount Pleasant and Chesterfield Township in Southeast Michigan.

The recent addition of CKC Automation builds on several acquisitions and growth opportunities for Depatie. Most recently, the company acquired Hydraulic Systems in Jackson, Portage-based West Michigan Hydraulics, and West Branch-based J.E.M. Fluid Power. Hose & Automation of Fort Wayne, Ind., also operates as a wholly owned subsidiary of Depatie.

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