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  IN THIS ISSUE                             FEBRUARY 2012

To the Point

New Ideas from the Newly Merged

Mike Lessiter

Mike Lessiter, Editor/Publisher

With the first-ever “Dealership Minds” edition on Birkey’s Farm Stores in February 2011, we set out to detail how each of the“cogs” in a benchmark-worthy dealership function together as one “machine.” What became the most talked-about project of the year created challenges for our editorial team when it came to this year’s encore performance.

We’d gotten to know Iowa-based Elder Implement via survey and article participation and our Annual Dealership of the Year program (the 5-store group earned “Best-in-Class” recognition in 2010). Because of their growth, and a willingness to openly share both successes and challenges, we set our sights on Elder as the subject dealership for the 2012 “Dealership Minds.”

What happened next was serendipitous, and, for Farm Equipment subscribers, fortuitous. Last November, just days before our staff piled into our trucks and cars to head to Iowa, Elder merged with the owners of another 3 stores to form an entirely new entity, Precision Equipment LLC (PEL). On the drive down, we rewrote our interview questions to also explore what many of you will face in the coming years — M&A.

So, we received a rare, inside look into a merged company’s earliest days, as employees were still meeting one another. The PEL staff candidly answered our questions about the thought processes leading up to M&A discussions, the go and no-go moments and the challenges to overcome. We returned with a primer on the pre-merger process, and how to bring different (and competing) cultures together to start pulling in one direction. That book is still being written, but we’ll circle back later to report on how that chapter unfolded.

I’m confident that this special edition is so captivating you’ll want to grab a coffee and immediately pore through these 13 articles. But, I’ll also “sell you” with a few personal observations:

  • Foes & Friends. These dealerships were fierce competitors. In addition to the battles for farmers’ business, Chairman Ron Farrier had lost prior acquisition opportunities to his eventual partners. Takeaway: Compete with all your might but do it honorably, as your opponent could soon become your comrade.
  • System-Oriented. This group takes great pain to build processes, and puts great trust in those processes. Data — and confidence in that data — results in good decisions. Takeaway: Growth requires strictly adhered-to processes for consistent results.
  • Skilled Planners. This group may be the best planners of any dealer group we’ve ever visited, with what appears to be a relentless pursuit to remove mystery from decisions. Our editors returned with notes like “Surprises are merely attention-failures,” and “Any emergency sufficiently planned for will not happen.” As an example, PEL prepares three operating budgets each year (high, normal and low) so a plan stands ready at all times. Takeaway: If your rivals are planners and you aren’t, consider yourself at a disadvantage. They will have better information, at the right place and time, to make the right decision.
  • Specialists as Leaders. None of PEL’s leadership team are owners, nor do they have voting rights. The owners — and John Deere — are putting a great deal of faith in these managers, particularly since managers without an ownership stake remains a commonly cited cause for the failure of yesterday’s company-owned stores. Takeaway: The sum of a professional leadership group can equal more than dealer-principals following a compass no longer relevant in a fast-changing industry.

For video interviews and additional web-only content gathered in Iowa, visit www.DealershipMinds.com.

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