MISSISSAUGA, Ont. — On Oct. 23, 2012, Wheels Group announced it had acquired MSM Transportation in a blockbuster deal worth $18.6 million.
The announcement came as a surprise, in part because Mike McCarron, managing partner and the public face of MSM Transportation was just 52 years of age – seemingly too young to be considering retirement.
What was the reason for the sale? Why was the timing significant? And what was learned along the way about the arduous process of selling an established business? For the answers to these questions and more, we caught up with McCarron for an exclusive interview.
When we spoke to McCarron, he had just assumed a new position in mergers and acquisitions with Wheels Group (a role he was mindful not to discuss with Wheels until after the sale of MSM had been finalized).
Over the course of the next week, Trucknews.com will be running the seven-part interview. The interview will also appear in the January issues of Truck News and Truck West magazines. You can also check out the November-December issue of Motortruck Fleet Executive to catch McCarron’s regular column, in which he writes about his reasons for selling the business.
For now, enjoy Part 2 of executive editor James Menzies’ wide-ranging discussion with McCarron:
Part 1: Why he sold his business
Part 2: Finding the right fit
Part 3: Negotiating the Deal
TN: So, once you identified Wheels as a strategic fit, what came next? Did you sit down in a boardroom like this one and hammer out a deal?
McCarron: The first thing we did was hired an investment banker, who helped us maximize the value. They can be very expensive, but I like an investment banker almost as an agent for a hockey player. People say ‘Why does a hockey player need an agent?’
The problem with negotiations is they can get difficult, and they can get personal. You have to be very careful because when it does get personal, if you are involved in the negotiations you can sometimes take it too personally and set the negotiations off. We felt that working with an investment banker, their experience was great, they helped us work through the legal jargon – in particular dealing with a public company – and they really helped us get to the finish line.
TN: Were you completely hands-off during the early stages of negotiations, allowing your investment banker to represent you as a hockey agent would, or were you involved at every step along the way?
McCarron: There was a ton of direct contact because when you’re talking to a public company, there is a fiduciary responsibility that no stone can go unturned. When no stone goes unturned, there are a lot of questions, questions we didn’t always have the answers to, at least initially. It’s a really complicated process.
What people don’t understand is that the due diligence isn’t only on the side of the acquirer. We did a lot of due diligence to determine if it was the right fit for us. Part of the deal was stock, so we had to make sure the paper we’re getting is good paper.
The part I think everyone forgets, James, is that while this is going on, you still have to protect your bottom line. As much as we began discussions in January of last year and closed in October, the closing is based on the numbers at that time. So, now you have your financial team and your administrative team doing reports, answering questions and going to meetings, but they still need to be managing the house. People tend to forget about that. The day someone knocks on your door is not the day you sell the business. It’s based on your financial statements, so every time you have a bad month – or conversely, a good month – it’s affecting the numbers. The numbers are based on the snapshot that day, but they take a brand new snapshot the day they close the deal.
– In Part 4 of this interview, McCarron reveals the biggest surprise in selling his business and how the companies involved managed to keep it quiet