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In conversation with Mike McCarron Part 6: Making the adjustment

MISSISSAUGA, Ont. -- On Oct. 23, 2012, Wheels Group announced it had acquired MSM Transportation in a blockbuster deal worth $18.6 million.

Mike McCarron
Mike McCarron

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, 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.

Part 1: Why he sold his business

Part 2: Finding the right fit

Part 3: Negotiating the deal

Part 4: The biggest surprise & keeping it quiet

Part 5: Delivering the news

Part 6: Making the adjustment

TN: On a personal level, you started MSM at a young age and have spent most of your professional life owning your business. Now, you’ve cashed in, you’ve got money in the bank and you’re going to work for someone else. How difficult do you expect this transition to be?

McCarron: I just started this week. I’m only 52 years old. Frankly, I’m the type of person that with all the free time and a little bit of cash in the bank, it can be a dangerous if you’re not careful, because I’d get bored out of my mind.

I don’t have to work anymore. I’ve been pretty frugal with my finances, money was never that important to me and nothing is going to change in my life. Five years from now, there won’t be a Maserati in my driveway. This wasn’t about becoming filthy rich and changing my lifestyle, the biggest thing for me was securing my family.

The advice I kept getting was the biggest mistake you could make would be to head to the hills for four or five years, get bored out of your mind, then come back and nobody remembers who you are.

TN: Is this a newly created position?

McCarron: Yes, it is, with the Wheels M&A team.

TN: Should we read into that then, that Wheels is looking to acquire more companies and continuing to grow?

McCarron: Wheels went public with a plan that they would like to grow their business organically and through mergers and acquisitions. A big part of buying MSM was consolidating the third-party space. Like Doug and his management team, I think there will be a tremendous opportunity. What I believe is, when you look at the demographics of the third-party business, that all these freight brokerage entrepreneurs who were getting to be 55, 60-plus years old, are going to want to retire at the same time. The question is, who’s going to buy them?

I want to investigate that market to take advantage of the demographics in the industry. Look at the freight brokerage business; there are no contracts, it’s all goodwill, it’s all handshake deals and it’s all transactional.

You don’t pay for it and if you look at freight brokers, that’s all they have. Also, I think a lot of people are tired; they’re worn out.

If you look at things historically, when business goes bad, the smaller, weaker third parties tend to get gobbled up because they get rationalized out of the supply chain.

My goal here at Wheels is working with the rest of the management team is to build programs that allow us to consolidate a lot of these Canadian and American third parties when it comes time.

It’s a pure probability model. I can tell you whose going to retire, why and how, I just can’t tell you when. So part of this is creating some services for the owner/operator, single sales rep that’s looking to get out and even for the larger freight brokerages. I think what they’re going to find, like we found, is that as this industry continues to age, it’s going to be far more difficult to get out, because there’s going to be a glut in the market and there aren’t going to be a lot of buyers.

– In the conclusion of this interview, we ask Mike what business owners should be doing now to plan their exit strategies

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