Pictured Above: Brian Carpenter, general manager of Champlain Valley Equipment, says it’s essential to have patience with new employees during an acquisition. They may have a difficult time with change, but can become dedicated employees given time to adjust.
Champlain Valley Equipment has done its fair share of growing over the last 15 years. They’ve gone from 1 store founded in 1970 to 5 stores today, with all of the acquisitions taking place since 2001. Champlain Valley has made asset purchase agreements for each of its six acquisitions, giving them more flexibility to be able to purchase the parts and wholegoods they want from the dealership. Two of the stores the dealership has acquired over the years were consolidated into existing stores while the rest became new locations.
When it comes to acquiring a new store, Brian Carpenter, general manager of the New Holland, Case IH and Kubota dealership group, says the process is different each time. “I thought I could script the acquisition process and it didn’t work. Each acquisition has its own challenges and nuances,” he says. “We still set out with a general plan, but I don’t get too wound up over little bumps in the road. At this point, I just expect them to happen. We try to work through challenges as they appear. I keep my ear to the group and try to make sure the new store gets the support they need to make the transition.”
The Planning Begins
After the purchase and sale agreement is signed, about 4-6 months before the deal closes, Carpenter gathers the heads of each department together to begin planning for the business and cultural integration phase of the acquisition.
“I can do most of the business plan, the pro forma and business rationale on my own,” he says. “But when it comes to the operational side of the new store, the daily operations and how it’s going to fit into the larger organization, it’s good to get the department heads from the other stores to provide some input.”
The department heads create a training package for their respective departments based on what they already know about the new store and what they expect to change in the sales, service and parts departments there. “The new store’s employees have to be trained on a variety of things from new parts books to machine inventory, so we bring the department heads together early on so they have time to methodically plan the new employee training and still manage their own workloads,” Carpenter explains.
When he announces the acquisition to the department heads, Carpenter reiterates that they are still in the negotiating phase and that it’s critical not to release any information about the acquisition early. “We have to time the release of the acquisition, not only for our employees and customers, but for the dealer we’re acquiring. Many times, we give them the chance to hold a fire sale for the items that hold no value to us and we try to support them as they continue doing business over the next few months,” he says.
Making the Announcement
Several weeks before the close date, Carpenter makes the announcement of the acquisition both to Champlain Valley’s employees and to the acquired dealership’s employees, typically within the same day.
“There are always rumors. One time, there was a rumor that some other dealership was buying us out...”
“For our first acquisition in 2001, I took all of my employees out to breakfast to make the announcement and showed them the business case and the strategy behind the acquisition. From there, I drove across town to the dealership we were buying and they took a pause in business so we could pull all the employees together so the existing owner and I could make the announcement,” he says. “I was able to do that because we were still only a single-store dealership then. It was important to do it all within a single day, too, otherwise I knew that the news would travel across town and rumors would start as soon as I told one group.”
As the dealership has grown, though, Carpenter says this process has become a little more formal. “With more locations now, our employees are more spread out and it’s hard to keep that personal touch,” he says. “In our most recent acquisition, I did a conference call with all of the department managers at each of the stores very early in the morning to make the announcement and provided them with a written statement to read to their staffs so everyone received the same message at approximately the same time. Then I go to the store we’re acquiring and make the announcement at the start of the business day.”
History of Acquisitions and Owner Transitions
Over the past 15 years, Champlain Valley Equipment, a 5-store New Holland, Case IH and Kubota dealership in Vermont, has acquired six other dealerships. In several cases, the selling owner was offered a new position within the dealership. Brian Carpenter, general manager of Champlain Valley, says making the transition from owner to staff member has gone smoothly in each case.
Still, it’s hard to keep rumors from preceding the announcement. “Generally, the Champlain Valley employees get a sense that something may be going on even before I make the announcement,” Carpenter says. “There are always rumors. One time, there was a rumor that some other dealership was buying us out. It’s important to make the announcement as soon as it makes sense for both dealerships to get the correct word out on the streets and keep rumors to a minimum.”
When making the announcement to Champlain Valley’s customers, the store managers will contact key customers and explain the situation and the logic behind the expansion. For the other dealership’s key customers, Carpenter visits each with the existing owner or the lead salesperson. They also send out a letter making the announcement to the acquired dealership’s top several hundred customers. At this time, if the acquired dealership has any open accounts, Champlain Valley also sends a notice with its credit policies.
After the deal is closed, Champlain Valley writes a press release, working from material provided by New Holland as a base, but adding a more personal touch welcoming the employees and customers into the Champlain Valley Equipment family. “We also get a picture with the former owner and post the news to our website and Facebook page,” Carpenter says.
Another reason for making the announcement to the dealership employees a few weeks before close is because Champlain Valley doesn’t guarantee all of the acquired dealership’s employees will keep their jobs. “With an asset purchase, we’re not buying the business in its entirety, so we don’t guarantee the employees a job,” Carpenter explains. “That being said, we have probably offered about 90% of the employees work over the years, including a few of the previous owners.”
Carpenter has a discussion with the current owner about whether there are any issues with any of the employees who, whether because of family ties or for some other reason, the dealership has employed when they should have been let go. Carpenter has this discussion with the current owner before the acquisition is announced to the employees.
“Before we even make the announcement, I’m observing the employees and talking with the owner,” he says. “I keep my ears open to hear about the reputations of the employees at that dealership. I don’t want to go into the interview process blind. There are go-to employees in every dealership and those are the employees you want to make sure you keep.”
After the announcement is made, each employee at the new dealership is asked to provide a short resume with their qualifications and years of service, as well as their current salary. Carpenter then conducts interviews with each department head. While Champlain Valley hasn’t had to let go of any of the department heads in past acquisitions, the dealership has occasionally moved them to other positions.
Interviews are then conducted with each employee, though Carpenter says he doesn’t typically conduct these interviews personally anymore. As the dealership has gotten bigger, he now allows the store manager to hire the parts counter employees and service technicians.
If the employees are offered a job, their original hire date is maintained in regard to benefits and salary.
During the rehiring process, Carpenter also pays attention to the culture at the store and how different employees positively or negatively affect the culture. “Some of the things I look for are whether the employee genuinely cares for the customer and has a desire to do right, not just sell as many parts and wholegoods as they can,” he says. “I also look for how well the employees work as a team. We want a group that will work together to find solutions.”
The Day the Deal Closes
Champlain Valley typically closes its acquisition deals at the end of the week to avoid disrupting business as much as possible. When the deal is signed, the dealership will close that Friday and the employees from the other locations come together to help cleanup the facility and switch over the signs at the new location.
“We often spend a lot of that weekend cleaning,” Carpenter says. “We’re all kind of pack rats by nature in this industry, so we want to present a cleaner, fresher image. Sometimes we’ll add a new coat of paint to freshen everything up and make the store feel different. We immediately pack any dead stock and send it back to the manufacturers.”
This process involves buying new uniforms for all of the employees at the acquired dealership, changing the dealership signs and putting new decals on all of the trucks. It’s not always perfect by the following Monday after the deal closes. Carpenter says his goal is for the new dealership to look and feel like a Champlain Valley store by day 30 after the close.
“There is a lot of activity happening in that first month,” he says. “That can be a tough transition for some of the employees. If we lose any employees, it’s usually in that first 30 days.”
During the first week following the deal close, the department heads from the other stores gather to train the acquired dealership employees. “The sales staff has to learn a whole new system because we have centralized accounting,” Carpenter says. “The technicians and parts counter employees still wait on customers, but there are blocks of time scheduled for them to learn how our timecard system works and how to punch the codes for labor. We also bring spare parts staff over from other stores so the employees can train on the new manufacturers and parts catalogs and how we do our tickets. Those first few weeks can be like drinking from a fire hose for some of the new employees, it’s overwhelming.”
4-6 Months Before Close
- Sign purchase and sale agreement.
- Bring department heads together and announce acquisition so they can begin making a plan to transition the daily operations of the dealership and train the new employees.
- Begin observing acquired dealership’s employees, talking with the current owner about the employees and identifying employees to let go and any cultural changes that will need to be implemented.
Several Weeks Before Close
- Announce acquisition to employees and acquired dealership’s employees in the same day.
- Ask acquired dealership’s employees to submit resumes and begin interviewing for the rehiring process.
Week the Deal Closes
- Try to close deal on Thursday or Friday.
- Close the dealership for the weekend and “flip” it, adding new signs, getting new uniforms ready, adding new decals to the service trucks, cleaning the dealership and sending aged parts back to the manufacturer.
Week After Close
- Train employees on new business systems and procedures.
- Begin cultural transition.
30 Days After Close
- Acquired dealership should look and feel like part of the larger dealership group.
Carpenter says things like answering the phone the same way as other Champlain Valley stores are the last things to fall into place. “People get into habits and it can be tough to unify some of those simple things,” he says. “Every store has a slightly different culture, but to work as part of the larger Champlain Valley team, they have to be able to assimilate at least to the base culture of the company. We have roughly 120 employees and we work hard to create a culture of working together. We have employees who travel in between stores and we need them to be able to go in and present a similar image as the other employees at that store.”
Working with a Consultant
Carpenter is a member of a dealership 20 group led by Dr. Jim Weber. “The strength of working with a consultant is that they’ve seen so many different situations, more than I will ever see,” he says. “Jim was the one who told me early on that an asset purchase works well, specifically because you don’t have to hire every employee. In 2000, as we were getting ready for our first acquisition, I joined the 20 group and bounced a lot of ideas off Jim. We were the smallest dealership in the group at that time.”
Another asset of joining a 20 group was working with the other dealers and bouncing ideas off them, Carpenter says. “They had a lot of good ideas and things for me to look into for acquisitions. They even shared copies of their buy/sell agreements. I’ve saved a lot in attorney’s fees because of them. I’ve written every buy/sell agreement we’ve done and then I take it to the lawyer to get their blessing and it’s done.”
As Champlain Valley has added additional stores, Carpenter says the acquisition process has become more complex, but the dealership also has more sophisticated resources to dedicate to the process. “I wish I could say I’m more organized now than when I did the first acquisition, but I’m not,” he says. “As a dealership, we’re more organized, but as an individual, I feel like things pile up and no matter how much I try, I can’t seem to get ahead of the curve.”
For Champlain Valley’s first two acquisitions, Carpenter spent 3 days a week in the acquired stores for the first 2 years each. “I couldn’t even imagine having that much time now,” he says. “At some point — and I don’t know where that point is yet — it pays to have an executive staff for the dealer-principal. Eventually, I’m going to need someone to help keep me organized. As the acquisitions pile up, so does the workload for other things.”
While he may not be able to spend as much time personally training and working with a new store, Carpenter says he is better able to plan for an acquisition and as a whole, the dealership is better prepared. “I have a lot of really high quality people at this dealership today. They are fully capable of integrating a new store into Champlain Valley Equipment. I could just write a check and turn over the acquisition to them and I know they could handle it because they’re that good at what they do,” he says. “As a dealership, we’re larger and we have more resources now than we did 15 years ago to help take some of the load off my shoulders.”
Advice for Dealers
After undertaking six acquisitions in the last 15 years, Carpenter’s advice for other dealers making acquisitions is to have patience. “A lot of very high quality people have a difficult time with change. If you can help them through the acquisition, they can become some of your most loyal and dedicated employees,” he says. “If I had been less patient and understanding, there are more than a few employees I might have run out of the company a long time ago.”
To help make the transition easier for the acquired dealership’s employees, Carpenter says it’s important to encourage existing dealership staff to lend a hand and mentor the new store’s staff. “When you have other employees explaining things and the message isn’t just coming from higher up, those employees are able to get a better sense of the company as a whole,” he says. “The heart of the dealership is the mid-level managers. It can be tough for new employees and managers to commiserate with me as the new owner and it helps to bring over a different store’s service manager, for example, to lend them a hand.”
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