Everybody Loves Alain
Alain Bédard is like the coolest guy at the high school prom. He’s not only confident and casual with a flair for hot cars, he’s one of those guys who gets to dance with anybody he chooses.
There are very few people in this industry who wouldn’t appreciate some attention from Alain Bédard. And he’s on the prowl. Rather, his trucking company TransForce is.
Since it became an income trust in 2002, TransForce has purchased more than 46 companies. And he is going to continue the acquisitions. So the question on everybody’s mind is, “Does Alain Bédard want you?”
The answer is ‘yes’, spoken as loud as your loudest air horn. But only if you’re the right fit.
First, you have to be Canadian. Bédard says he’s too busy to worry about American business at the moment. Plus, he says he’s not too interested in the Maritimes or something that doesn’t fit into his family of companies.
“If a guy calls me and he has 20 trucks in Vancouver in the flatbed division, I’ve got no interest in that. But if the guy calls me with an LTL [fleet] in Ontario, with $25 million in sales, it fits.
“It’s got to fit the geography and we have to have the critical mass,” Bédard says. At the moment, about 52 percent of Transforce is LTL –this includes, among others, TST Overland, Canpar, Canadian Freightways, and Kingsway. About 20 percent is truckload, including Besner, Highland, and SAS International.
He also has to like you and your team. “If we say ‘okay, we like the company, we like what these guys are doing, we’ll look at the team, at the people.
“If a guy tells me, ‘Alain, I have a super team but I lose money. But it’s not my fault, it’s the market,’ we won’t go for it.”
So no whiners need apply. Another thing:
Because TransForce is an income trust, it must provide payouts to its investors (a.k.a. shareholders) annually. Income trusts must be lean in order to keep the unit holders happy, so excess cash must be returned to the trust’s unit holders in the form of taxable income, just like money from any other kind of trust fund.
That means there’s no huge war chest of cash to tap into. Which means in turn, according to industry experts, Bédard’s got to be extremely lean and flexible. Bédard says that his payouts to unit holders are actually smaller than most income trusts, because of that same reason. He wants to be as conservative as possible. On a practical basis, he says, he’s not one for expensive chromed iron.
“You have to look at your return on assets, which to me is rule number one. If you’re an income trust, you need revenue and you need cash flow so you can’t spend too much on your equipment.
“If I’m buying a Mercedes to deliver pizza, I’m not going to make much money. But is it the fault of the pizza? No.” That’s why he’s not one for showy trucks or anything that he sees as wasting money. Bédard also wants you to be successful.
You can try calling him, but he says he abides by a lesson he learned a long time ago — “Never chase a deal.” Only a handful of the 19 companies TransForce has acquired since becoming an income trust in 2002 approached Bédard. The others, he called first.
If he wants you, he’ll find you. Even if you’re one of those people who can say without smirking that your company’s not for sale.
Gary King is the president of TST Solutions, which TransForce purchased in 2002. At the time, he was president of TST Overland Express, the largest of the four companies that comprised TST. “When he talked to us originally, we weren’t even interested in selling,” King says.
Darshan Kailly was part of the management team trying to take over Canadian Freightways in early 2004 when Bédard’s TransForce won the bidding war for the 70-year-old western LTL carrier.
“We were on the opposing sides to buy the company but after his bid was successful, we had a meeting of the minds and he lived up to every end of the deal.”
As one transportation consultant in Montreal put it, “When these people sell their companies, they’re buying a good night’s sleep.”
But are they really?
Other newer members of the TransForce family told Today’s Trucking that Bédard has extremely rigourous expectations and he does leave his managers alone to manage, as long as they meet budgeted profit levels. His big measurement stick, they say, lies in benchmarking TransForce’s various units, one against the other.
Kailly put it this way: “We’ve got Canpar, Overland and a whole bunch of other truckload companies [within TransForce], some really good operations to compare ourselves to.
“We are privy to some very good information, cost per mile for example, that’s not available to every independent.”
Bédard does pride himself on the way he lets each company benchmark itself against its fellow TransForce subsidiaries. It’s Bédard’s way of measuring success. It’s designed to bring out the best in everybody.
If you do sell to TransForce, you certainly don’t get a free ticket to early retirement. You’re still very much in business. Kailly: “We’re still CEOs and presidents and we want autonomy,” says Kailly.
And simply being a member of the $1.1 billion TransForce behemoth is no guarantee of longevity. Bédard has closed down at least two of the companies he purchased since 2002. “Everybody makes mistakes,” Bédard says. “Some people want to try to fix them by working every day all day for five years; me, I just decide to act.”
Bédard does not run the company for the heads of outfits he’s bought. And neither does the purchase come with a holus-bolus staff cut in the name of efficiency.
For one thing, Bédard says he doesn’t buy any trucks. “If a guy comes to me to sell me trucks, I’ll tell him, ‘go see Gary King at Overland. Not me.’ Why? Because I don’t want any excuses when I talk to my guy about maintenance, fuel, economy or whatever.”
So even if Bédard calls, your work is just beginning. Bédard will very likely be buying more companies, he says, but he won’t say how many or when. “Just remember,” says the CEO of this country’s largest trucking operation, “TransForce starts with T. Tiger starts with T. The tiger is always the last one surviving in the jungle.”
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