Pictured Above: Brian Taschuk, president of Agriterra Equipment, started the dealership in 2013 by acquiring the 3-store AGCO dealership Selmac Equipment. Today, Agriterra has 8 locations.
Agriterra Equipment, an 8-store AGCO dealer in Alberta, was born out of an acquisition in 2013. Brian Taschuk started the dealership by acquiring Selmac Equipment, which was a 3-store operation. Since that initial acquisition, Taschuk has acquired another dealership every 6 months. Today, the dealership has grown to 8 stores. “We’re on a constant integration journey every month,” he says.
Taschuk is no stranger to integrating company culture following an acquisition. Prior to starting Agriterra, he had been the CEO of Rocky Mountain Dealerships, Case IH’s largest dealer group in Western Canada. When he started at Rocky, the dealership had 4 stores and by the time he left there were 38 locations.
“So far I haven’t had to go looking for acquisitions. I’ve had people come to me because they’re ready to move on, either because they’re retirement age or they are not consolidators. They don’t see a fit for them long-term in the new dealership environment where you have to have multiple stores.”
Communicating the Change
While Taschuk handles most of the integration process, he does have a team of key people who are involved. That team includes the controller, senior accountant, operations manager, sales manager and the product support manager. “We have an extensive integration checklist we go through and the key people are aware of the deals that I’m working at any point in time,” he says. “But, most of this isn’t public until a couple of weeks before the actual takeover date.”
When the leadership team announces an acquisition to Agriterra’s current staff, it’s pretty low key. “We’ll send out an email and a note on the website that says, ‘Here we grow again,’” Taschuk says. The announcement to the employees at the acquired store is more formal, however.
“It’s a tremendous culture shift and suddenly life becomes more structured and each employee has a goal to work toward. Some people can work in that environment and some can’t…”
In most cases, Taschuk says they will meet with the acquired store’s employees the week before the official takeover. “We’ll do a presentation on our company and our values, introduce them to our employee handbook and work to have them all sign on as employees, because ultimately there is no obligation for them to stay,” he explains. Agriterra works with the owner of the acquired store to determine when to inform the employees. “I had one acquisition where 3 months ahead the owner said, ‘You might as well tell everybody today because the rumor’s going to get out anyway.’ Others don’t want to say anything to anybody until the day before.
“I think there’s a problem in announcing it too far out. They still have to serve their current owner and not get distracted over what’s going to happen. Within 30 days of the actual takeover date is probably soon enough, but generally we try to make the employee announcement within two weeks of takeover,” he says.
The dealership notifies the customers in a number of ways. Usually they’ll send out a series of three direct mail pieces to each customer announcing the change, in addition to placing ads in local magazines and newspapers. The announcement is also made on both the Agriterra website and the acquired dealership’s website, Taschuk says.
While it’s always a concern that customers will think they’re not going to get the same quality service they are used to, Taschuk says every situation has been different for them. “Some people knew the owner was retirement age and something was going to happen — they’re just happy that there is some succession there. And for others it may come up as a bit of a shock.
“But I think our structure, our strategy, and obviously AGCO dealers are much smaller in general than a John Deere dealership for example, making it easier to personally discuss the transition with customers,” he says.
Agriterra works from an extensive 110-point checklist that ranges from getting manufacturers to sign off on the deal to when to change the license plates on the service trucks. Taschuk says he worked off of guidelines created by AGCO to assist in the transition a few years ago. “They had developed a pretty extensive acquisition handbook and in the Selmac acquisition we used what we thought was appropriate and discounted what we didn’t,” he says.
Taschuk says that prior to meeting with the employees at the new store they’ll sit down with the old owner to discuss which employees should sign on with the new company. “We’re relying on this knowledge of the staff to decide if we hire these employees. In every situation there are one or two people who have not come on with us, either because of the request of the previous owner or their own volition. People either leave because they are of retirement age or the owner of the acquired company has extra staff that should have been dealt with previously,” he says.
For those employees who will be staying on with Agriterra, there’s a formal layoff from the previous owner and they receive a payout of all their holiday pay and benefits, Taschuk explains. In most cases, he says, the majority of the staff are re-hired. This includes the previous owner who then serves as a branch manager for Agriterra, at least initially.
“We want to keep branch managers there and keep the personal contact the customers are used to. Customers are coming in for coffee and we go through the explanation of who we are and that things are going to largely stay the same as far as the support they get. We also discuss the improvements that come with more access to the products and people and expertise because now the dealership has a greater overall scale,” he says.
During the week leading up to the official switch, Agriterra’s transition team is at the new store on a daily basis preparing to switch the business system over and getting employees trained on it. “As time goes on there’s less and less involvement from head office depending on the skill level of the people at the store. We have a branch manager, parts manager and service manager at each store. We anticipate it’ll run similar to how it did before because those are the people who made it a successful business in the past and they have customer relations and the product expertise and market expertise,” Taschuk says.
In his experience, the transition and learning the new systems generally goes smoothly. “Certainly it’s a little bit of a burden to start, when they’re learning new systems, but by and large most of them embrace it and are fine. People who aren’t comfortable working in this structured, larger environment move on,” he says.
On day one, Taschuk says it’s almost business as usual at the acquired store because the Agriterra staff spent the week before getting the HBS business system installed and training the employees. Changes like updating the signage at the store are more gradual and take place over the next few months.
Once our dealership established a model to follow the process runs pretty smoothly, Taschuk says. “The bigger obstacle of course is getting those people at the acquired store to understand the business and our value system.”
Integrating the Culture
Taschuk has found that the initial meeting the week before the takeover is an important time to establish trust with the new employees and to start communicating your vision and values. “Those initial meetings where you describe the mission, vision and values of the company are really important. It’s important to relay that we’re buying this company because of the strength of the people and the strength of the market, and we’re not out just to blow the place up and start from scratch,” he says.
When Problems Arise, It’s Back to Square One
The week before Agriterra Equipment officially takes over a dealership it is acquiring, the integration team spends time at the store introducing the employees to the company and going through the employee handbook. The employees have that week to decide if they want to stay on with Agriterra, an 8-store AGCO dealership in Alberta.
In most scenarios, the majority of employees sign on and a few may part ways for various reason. That wasn’t the case for one of Agriterra’s deals, though. “We had one dealership where none of the employees signed on,” says Brian Taschuk, owner of Agriterra.
Early in the acquisition process, one of the shortline manufacturers did not renew its contract for the store with Agriterra. Taschuk says this didn’t stop the deal, but it left them with fewer products at that location. “Then, a new dealership opened up down the street and offered everybody a great deal,” he says.
“There’s a couple of issues that are key here. One is getting the employees to sign on because if we have no employees we don’t have a company, and the second one is obviously getting manufacturers agreements. A change of control is the manufacturers opportunity to make a change.”
Since Taschuk knew none of the employees were going to stay on, the deal was delayed and they revisited it a few months later. “We eventually acquired the dealership, but in the meantime he had to rehire new employees. We helped him in part of the process to hire enough employees to make it a business again. But yeah, that was a big surprise.”
After that initial communication, it’s important to address everyone’s questions on the spot, regardless of how basic the questions may seem. “There’s a lot of hand holding that has to go on at the outset. But again I think it’s letting them know right up front who we are and policies like no smoking in the building right from day one. Maybe it’s a shock to people right from the start, but over time it works out pretty well.”
Taschuk says the cultural differences between Agriterra and the stores it’s acquired are significant. In many cases, employees are going from a fairly unstructured environment to a very structured environment. “All the stores we’ve bought, other than the first one, were single store organizations. The person in the corner office was the company, and culture went through the organization by osmosis. You knew what was expected of you because every day the owner of the company was walking by your parts counter or your service bay and talking to you. A lot of the departments didn’t understand the financials or if their department was making a profit or a loss. In a lot of cases even service department’s technicians had no system for tracking their time for jobs they were working on,” he says.
“It is a tremendous culture shift and suddenly work life becomes more organized and each employee has a goal to work toward. Some people can work in that environment and some can’t. But by and large most of them, in time, appreciate understanding what’s driving the business, if their department is making money or not, and what it takes to drive customer satisfaction and growth in the company. Those people stay on and are excellent employees.”
Taschuk says communicating your values right up front is essential to making the transition a success. “It might seem bureaucratic or trite, but everybody’s got to understand that our business is to win the customer’s favor. For 90% of the people who are customer-facing, our primary job is to keep the customer elated with what we do. And the way we’re going to do that is obviously continue to grow and be profitable and provide the customer with what he or she wants.”
He says in most cases, the employees are happy with the change. There are always some who want the dealership to stay a family organization with few guidelines, targets and local ownership.
Agriterra has found that the adjustment is easier when they implement all the changes right away. “There’s no easy way to pull the Band-Aid off, right? We’ve found it most effective to do it all at once and in conjunction with changing over the business system. We’ve tried to stagger that over time and it just becomes more and more difficult,” he says.
On the Job Training
Training begins the week prior to the official takeover, and to a certain extent consists primarily of management being there to answer questions as they pop up. “There’s no big Agriterra University where there’s all kinds of classroom training, it’s all on the job. We’ve found that you can bring people in and train them on how to use the business system, but as soon as they get back to the store and start trying to use it themselves, much is forgotten,” Taschuk says.
The dealership uses a screen sharing program to handle training remotely on an as-needed basis. When an employee has a task to do, and they need some guidance, the can log into their computer with an employee at a different store who has experience with that specific task. The experienced employee will watch as the new Agriterra employee completes the task and guides him or her along the way.
For customer-facing employees, Taschuk says within a matter of a few weeks they are usually comfortable with the Agriterra system and way of doing business. The accounting side of the business takes a little longer though. “With the business system certainly there is a lot of room for errors and lots of mistakes to be made, and you can certainly misrepresent your financials if things aren’t done correctly. Nobody likes learning a new business system or a new computer system, but one of the reasons why we stayed with our current supplier is for the customer-facing employees. It’s a pretty user-friendly system and it doesn’t take them long to get up to speed.”
After Taschuk makes his way through his 110-item checklist, the management team conducts what they call a financial and expectation review of the new store on a monthly basis. “We discuss the opportunities and the issues in each department and the progress. And that communication is the essential part of it. We want the branch manager to ‘own his store,’ and we want them to treat it as it’s their own business. Then once a month, we’ll come and review with them and give them guidance if there are things they’re doing that don’t match up with our long term vision and pat them on the back for the things that are working well.”
One indication that the acquisition transition was a success is employee retention. Taschuk says if they’ve done their job properly, the employees are there and engaged. He also measures success on the financial results and any customer feedback they’ve received. “Our plan is to keep the employees long term. If the employees are staying there, then we’re doing our part for getting them integrated personally and financial results will come,” he says. “And again, the customer is the ultimate criteria. If we don’t have customers, we don’t have a business. So over time the customers will tell you if things aren’t working right.”
In most cases, Taschuk says it takes 12-18 months for people to view themselves as Agriterra employees and not ex-employees of the old store. “It’ll happen quicker or longer depending on how long the previous owner stays on, but in general after 12 or 18 months we’re pretty comfortable that everyone’s pulling in the same direction.
“Every owner’s a little different. This goes back to my Rocky days, when I had some acquisitions where the owner continued to be there for 10 years after and was an excellent solid Rocky employee and bought into the program right from the start. There have been others who after 6 months had left. It varies a lot.”
Looking back on the acquisitions he’s made over his career, Taschuk says there really isn’t anything he’d do differently. “There’ve been mistakes, but those have just reinforced the right way to do it. All in all, I think it’s gone pretty smoothly,” he says.