KISSIMMEE, Fla. — Mergers and acquisitions are a key part of trucking. It seems that almost every day one carrier is buying another, whether it’s to decrease competition, own more equipment, or gain a bigger piece of the pie.
At the Truckload Carriers Association’s (TCA) 80th annual convention in Kissimmee, Fla., a panel of executives came together to talk about how to navigate a merger or acquisition to grow your business to the right size.
The panel included Roy Cox, president of Best Cartage; Joey Hogan, president of Covenant Transportation; and Don Daseke, president, chairman, and CEO of Daseke, Inc. who have all participated in their fair share of acquisitions.
According to the panelists, the most important thing to consider when buying a new trucking company is the employees you buy when you purchase the company.
“The biggest asset you don’t put on the balance sheet is people,” Daseke said. “So make sure you spend time getting to know the people within the company. That’s huge. You have to realize you’re buying a business, yes, but really, you’re buying a team, so you have to make sure you know the team you’re acquiring.”
One thing Daseke says he does when he purchases a new company that bodes well with the newly acquired employees, is he is adamant about not calling it a sale, or purchase, or acquisition.
“We call it a merger,” he said. “It plays well with new employees because it makes them feel like a coming together as opposed to a purchase.”
Cox agreed that getting to know the employees of the newly acquired or soon-to-be acquired carrier is a must.
“We make sure during the buying process that we talk to key players,” he said. “We like to spend as much time with those key players as we can, so we can get the information we need.”
Daseke said one thing he does after a merger, is throw a small party or gathering to welcome the new team to Daseke.
“We always make sure to welcome them to the family,” he said, adding that you can ease the stress of your new employees by promising to not shake things up too much.
“You want to make sure you minimize change for the troops,” he said. “If you can tell them there’s no management changes or people changes, it makes them feel better instantly. Because it’s scary for the sellers’ people who have been with the company for a long time. You purposely have to care enough about the people who are joining your business…People in my view make the difference in the success or failure of an acquisition.”
Cox said that typically he follows the sellers’ lead when it comes to breaking the news of the purchase.
“We find that the owners always want to explain to their company about why the acquisition happened first,” he said. “We do have a lot of joint conversations prior to that. But (the owner) sells them first on why he/she chose to be acquired…And I think that makes all the difference in the world.”
Hogan agreed, saying that it is crucial for the buyer and seller to “get aligned before the announcement.”
Timing is another consideration when you’re thinking about buying or selling, he added.
“I feel strongly that leadership within the existing company and selling company is crucial,” he said. “You don’t want to have an existing team that isn’t ready. You want to make sure the seller has a good succession plan and strong leadership on both sides.”
Hogan said that buying or selling to simply buy or sell, or to hide a problem, is a dangerous zone to enter.
Daseke also said to watch out for sellers that are eager to get the transaction over with quickly.
“A fast transaction is never the best one,” he said. “It’s like getting married. You have to look at all the aspects before you’re sure.”
All panelists agreed that sometimes you have to go with your gut, and you can’t be afraid of pulling out of a deal if you have any hesitations.
“The day before closing once, we pulled out,” said Hogan. “It was very last minute, but it just didn’t feel right. And you have to make sure you comfortable doing that and be prepared for that. Because it’s a lot of money at the end of the day.”