It’s been said that we learn far more from our failures than we do from our successes. This may be true, but dealers developing an integration plan for what will happen once an acquisition is complete can learn much from what other dealers have done right previously.
In our survey of farm equipment dealers on the subject of integrating one dealership culture into another after an acquisition, we asked the following question: “What are the common denominators you’ve seen among the most successful dealerships that transition and integrate stores without loss of performance?”
Even where dealerships have achieved a good level of success during the transition phase of an acquisition, the issue of keeping the previous ownership and/or management on board remains a contentious one.
On the “move ‘em out side,” James Sommer, Service Motor Co., says, “Put in new leadership — store manager, service manager, parts manager — from other stores within the complex. It makes the transition harder the first year, but better in the long run.”
Mike Hansen of Arthur Farm Power Inc./DBA Farm Pride, adds, “The most successful transitions are where one of your employees is put into the management of the location. They know what is expected of them and what they need to do to be successful. When customers walk in the door they need to see that the location is now under new management, not the same old place they were familiar with. You need to look like you are in business and are going to be there for the long haul.”
While he doesn’t specifically mention moving top managers out of the way in a newly acquired store, Tom Rosztoczy, Stotz Equipment, would seem to imply this approach. “Putting a veteran of the buying stores in the key leadership role and change things to your way of doing business in the first 90 days,” is how he puts it.
On the other side of the debate, Tim Brannon, B&G Equipment, explains, “I have seen few that have not suffered a loss of performance. The few incidences where there has been an increase in business are where the majority of the management of the purchased dealership was retained. The larger buying entity kept them happy and the customers sensed a continuum of service, a positive attitude, and greater value to them in being a valued part of the change.”
Gaetan Cournoyer of Groupe Symac concurs with Brannon’s sentiments. He says, “If the new dealership wants to be successful, there should be a certain continuity in the transition. Do not try to change everything on the first day, that will scare the employees and customers. They need time to understand what’s happening. The new dealer has to make sure that people want to work with him.”
Support from the Top
Regardless of who will oversee the transition from one owner to another, several dealers mentioned that it’s vital that new ownership must get the right people in the right positions and then support them.
For Lance Carlson, Quincy Tractor, it could be the current management of the store being acquired or new managers coming in from the acquiring dealership who can spell success during the transition period. “If the right people in the facility are in place, they only need to be empowered. This is what works best,” he says.
Larry Blackmon of SunSouth, also believes this approach has proven to be the best for new ownership to assure a smooth transition. “Most dealer acquisitions that I have seen succeed have good support at the top level. It takes a special management team to walk into a dealership and groom the new employees to move forward without disaster. Every store has its own personality and that only needs to change if it was a store that was struggling to start with. I have been to most of our 21 locations in the last 3 years and we are all different in some ways, but we all have the same goal — customer retention, profitability and growth.”
‘Personal’ Communication is Key
Underlying the differing approaches to successfully and smoothly integrating a new store into dealer operations is communication, according to several owners and top managers who responded to the Farm Equipment survey.
For one dealer , clear communication is the most critical success factor. “Nothing else comes close,” he says. “From day one we shower every location with ‘our own people.’ On the first day of our takeover, our CEO addresses every employee in the initial meeting and talks about our company’s philosophy and direction. We follow that up with one-on-one training on our processes and business system.
“We keep our employees on site until they are comfortable that [new employees] can perform the duties of the job to our expectations. Those same employees continue to serve as mentors going forward. They are the first people the new locations contact when they are having issues.” He emphasizes this approach and adds, “You can’t over-communicate and you can’t spend too much one-on-one time after an acquisition.”
Tim Young, Young’s Equipment, is also in the “communication is key” camp. He says, “It is important to explain the changes when they are made so it becomes a learning opportunity and not an edict from above. It is important that staff from the acquiring business spends time in the new dealership to answer questions, get to know the staff and customers and establish a presence in the community.”
Forward Planning is Vital
The secret to a successful transition from one ownership to another is in planning, according to Clint Schnoor of Agri-Service. “Successful dealerships do their homework. Spending ample time to know the market opportunity, the business practices, business system, the employee practices, culture, people and potential hurdles is key,” he says.
“Planning the transition and making sure that week one is smooth is critical. Think of all the things you must have in place, such as business systems, credit card processing, benefits, payroll, phones, etc., are ready to go is critical,” Schnoor emphasizes.
Chris Baxla of Baxla Tractor Sales insists that with an acquisition a new company is actually formed. “As a new company, we have to become one team heading in the same direction. The sooner we get everyone working together the faster we get there.”