In the early 1960s, Reuben Anderson, a successful St. Paul commercial plumbing contractor, had a master plan for succession at his company. His son, Lee, a recent West Point graduate, would partner with him and, in time, take over the business.
But then the senior Anderson made a mistake. In 1964, he gifted a 50 percent stake in an insulation business he owned, Asbestos Products, Inc., to his son. The plan was revised: Lee would work there for a few weeks, learn some business skills, then come back to the plumbing business.
Events didn’t follow the blueprint. “I found the business very interesting,” Lee says of Asbestos Products, which produced insulation for pipes, ductwork, and boilers. “And [Dad] said, ‘Well, if you like it, you can stay there.’”
He not only stayed, Lee Anderson transformed the small-scale installer of asbestos insulation into APi Group, a $1.5 billion family of companies that provides the commercial construction industry with fire-protection equipment, steel fabrications, and other products and services. APi was built largely through the acquisition and consolidation of small, often family-run businesses. In the course of 40 years, Anderson and APi have made more than 40 acquisitions.
Most of APi’s business is in the Midwest, but it’s been involved in projects nationwide. One of APi’s selling points is the one-stop synergy it can offer to a building project, given the wide range of capabilities under its roof.
“We look to projects where we can initially provide the structural steel, and then ultimately do the mechanical and electrical, insulation, garage doors, fire protection,” Anderson says. “Ideally, we would use all of the companies that can provide building materials and services in that particular job.”
The projects tend to be large scale. “We’re heavily industrial oriented, which means we do a lot of energy plants and electrical generating plants, paper mills, oil refineries,” Anderson says. “For the last 30 years, we’ve been one of the leading contractors in environmental pollution control equipment for the power industry, which is still going on as the laws change relative to emissions and so forth.”
APi had modest beginnings. Early on, it had to bootstrap its acquisitions. “We didn’t have a lot of net worth, and we didn’t have a lot of money,” Anderson notes. “You just grow just a little bit at a time to start with. It took four years before we made our first acquisition.”
Even then, the acquisitions were, Anderson says, “quite by accident—there was never a master plan to say, ‘Let’s grow this company into something really big.’”
In many cases, APi already had a business relationship with the companies it bought. The first, in 1968, was a small New Brighton fabricator of sheet metal and aluminum coverings for APi’s insulation. “The owner of that company was a good friend,” Anderson recalls. “He said, ‘Why don’t you just buy us, and we’ll be part of your company?’”