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Archive for October, 2018

The HD Repair Forum Announces Advisory Board for 2018-2019

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Following meetings with heavy-duty industry executives, educators, and consultants, the HD Repair Forum announces its 2018-2019 Advisory Board. This year’s Advisory Board members include:

Ray Chatfield, Truck Collision Services, Owner
Howard Elsenpeter, Hoglund Body & Equipment, Body Shop Manager
Dean Hancock, Bob Johnson’s Truck & Body, Owner
Fred Honore, Gerber Collision Services, Market Manager Fleet & RV
Monte Lewis, Monte’s Repair Shop, Inc., Owner
Wally Melia, SelecTransportation Resources, Corporate Body Shop Manager
Mark Polzin, Budget Truck & Auto, President
Ed Rietman, K&R Truck Sales, Inc., Owner
Rodney Rowland, Lakeside International Trucks, Body Shop Manager
Jason Shesky, Truck Zone, President
Chris Sterwerf, Fairfield Auto & Truck Service, CFO/COO
James Svaasand, Penske, Vice President-Collision Repair Ops & Development
Brian Vesley, Valtek Inc., President
Gigi Walker, Walker’s Auto Body, Owner
Steve Wolfe, Diversified Body & Paint, President

The HD Repair Forum is the only program dedicated exclusively to the heavy-duty collision repair industry and is open to everyone involved in the repair of heavy-duty/commercial vehicles in class 5-8. This includes shop owners, shop managers, fleet managers, dealer repair shops, commercial vehicle manufacturers,  insurance providers, and service, equipment, and technology companies.

This year’s advisory board is set to deliver an event that serv

es as extremely valuable to the heavy-duty collision repair industry. Their experience in heavy-duty collision repair builds a conference agenda filled with relevant and timely content.

The first advisory board meeting, set for later this week, will establish the most relevant topics facing this industry. Topics up for discussion include: continued increase of OEM repair support; industry economics and trends; commercial vehicle technology advancements and repair impacts, standard operating procedures, operational best practices, and more.

The 2-day event, being held on Tuesday and Wednesday, April 2-3, 2019, brings together all segments of the heavy-duty commercial vehicle repair industry in one place for collaborative discussions, education, future preparation, and high-level networking opportunities. The 2019 HD Repair Forum takes place in Fort Worth, Texas, at the Hilton Fort Worth.

“The inaugural HD Repair Forum of 2018 was an inspiration. Attendees, speakers, industry influencers, and sponsors alike, were relieved to see the heavy-duty collision repair industry come together and begin to create a mold for higher standards in safe and efficient heavy-duty repairs.” States Jennie Lenk, Communications Manager of the HD Repair Forum.

“Progress for the heavy-duty collision industry is imperative. The automotive collision industry has been experiencing this development in communication and collaboration for more than a decade, and the results in higher repair standards and more efficient processes has been very promising. It is at meetings like the HD Repair Forum where this progress will gain momentum, relationships to make development possible get established, and communication to the industry gets distributed.”

The Demystification of M&A – Part 3 TAKES TWO TO TANGO

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Our last article focused on the numerous motivations from a buyer’s perspective; we learned that sellers are wise to discern each potential buyer’s motivation as they enter into negotiations and prepare for due diligence.

Now it’s time to look at the seller’s side of an M&A transaction. Every deal requires a willing seller and a willing buyer (yes, occasionally we see unwilling sellers, but we’ll leave distressed and bankrupt sellers out to the equation for now). Seasoned buyers understand that timing is critical and the only way to buy a strong, well-run business on the buyer’s timing – other than luck – is to overpay. Everybody has a price.

Of course, serial buyers don’t call a disciplined process of continuously nurturing a healthy deal pipeline “luck”. And they shouldn’t. If your goal is to buy a stable business at a fair price, you often have to cast a lot of lines into the water, check on them regularly to ensure the bait still is good, and wait for a nibble. If you want to acquire several businesses, add a corporate development executive to your team whose job is to ensure every strategically-viable acquisition target is called upon regularly. As they say, make your own luck.

[Buyers also can wait for investment bankers and business brokers to send them unsolicited acquisition opportunities, but why wait? A proactive search process tends to yield better results than playing the waiting game and then competing with your peers after everyone gets the offering memorandum.]

The Nibble. When a seller shows some interest, a critical next step is to determine why the business is available. While it may seem counterintuitive, often a seller’s reason for exiting isn’t just to “monetize” the business. Let’s explore some scenarios:

1. Frailty. I can count on four hands how many deals I’ve been involved in that were heavily influenced by a health issue. Despite being a data-driven, analytical type, I have not tracked the different maladies. That said, owners suffering heart attacks (or near misses) likely have been the primary motivator, followed by a spouse’s serious sickness. Why is this notable? Beyond knowing that the seller may have a sense of urgency, there may be ways to sweeten a deal that makes it more attractive than others. In this situation, consider offering an employment position that allows the seller to maintain health insurance while reducing some of the stressors that may have led to the health issue.

2. Fear. In industries experiencing consolidation or obsolescence, sellers tend to be less rational. When a buyer suspects that a deal may be driven by fear, that should be a giant warning sign prompting detailed due diligence. Is the suspected “fear” something that would negatively impact the buyer? Perhaps the fear isn’t so obvious to a buyer. Could it be that the seller knows that eminent domain will be gobbling up a big chuck of the site, or a major lawsuit is looming, or a major customer is likely to go away because it is being sold to a company that won’t work with the seller, or the seller expects a key employee to be moving away. Think of a major risk in your business and then examine the seller’s propensity to suffer from the same situation. The scenarios are almost endless.

3. Fatigue. Health reasons and fear, particularly when combined, can result in significant fatigue for a business owner. When you sit down for an exploratory conversation with a potential seller over coffee and all that you hear is that he’s tired or that she’s not sleeping well, try to quickly discern between the fatiguing influences that would affect you as a buyer versus those that may be unique to the seller. If the seller is tired because, for example, he/she can’t find quality employees and is having to work double time, be sure to have a proven plan in place to eliminate this challenge (or acknowledge it and wisely walk away).

4. (In)frequent. Occasionally, a bored business owner becomes a rational seller. This is particularly common in owners who have started and sold multiple businesses. These “serial entrepreneurs” live for the start & build, but don’t get too emotionally attached to a business. Their objectivity in a deal tends to yield balanced outcomes. Conversely, another occasional motivator is situations with multiple partners having conflicting interests. Buyers should tread lightly in these situations in the event acrimony amongst the sellers leads one to make choices and take actions that potentially damages the blue sky that is appealing to the buyer.

5. Financial. Most success doesn’t occur by happenstance. Rather, business owners who have a clear vision, set goals and then direct their resources and energy towards achieving them, often have “that number”. That’s right – as soon as their business reaches a certain value, they’re a seller. They can be in the 30’s or their 60’s. Even the most experience buyers can’t recognize these sellers until they self identify, which often sounds like: “I need X”. Like the bored or serial entrepreneur, they tend to be more objective – hit their number and the rest of the deal will likely go smoothly.

6. Finally. More than any other reason, the desire to depart is driven by a date. Whether it’s the owner’s 50th, 60th or 65th birthday, often the calendar is the final arbiter. The seller has had a successful career, built a healthy business and now it’s time to rebalance the retirement portfolio’s assets from a risky business to cash. Why should buyers care? Often sellers in this category don’t have a significant sense of urgency, or so they want you to believe. If you’ve been around the deal block a couple of times, you know to not count that big chicken before it’s hatched. Savvy sellers will continue to invest in their businesses during negotiations and due diligence to not only create a sense of nonchalance about the deal, but also to be ready in the event it potential breaks down. They’re good at “playing chicken” about “counting their chickens” (sorry – I couldn’t resist!).

What’s the message here? It may not be just dollars driving a deal. Savvy buyers dig deep to understand their deal counterpart’s motivations and will structure deal terms to match their goals or allay their fears. Meanwhile, successful sellers are careful to project objectivity and artfully use perception to improve their outcomes. A key to successfully negotiating and structuring a deal is to know what drives the other side.

Comments / questions / criticisms? Are you contemplating a deal that might fit into one of these categories and you want to ensure you’re making a sound decision? Feel free to e-mail me: – I’m happy to explore the circumstances with you. Our next article will explore the anatomy of a deal. Until then, happy dealing!


Road to Green: The Generation in Our Industry Who Are Frustrated – Why?

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Many younger HD shop “owners”, managers, coupled with many HD parts distributors, WD, and Manufacturer corporate/division managers/staff within our industry, want to change their business processes. They have taken the time to study the HD industry, their market and go to classes and learn what is necessary to start changing today to secure the business for tomorrow. They truly understand that, with technology moving so rapidly at all levels of the aftermarket and other details that are taking place, change is not an option. The problem is they do not have the power to implement the changes required, because the “real authority” from the previous generation, or hierarchy, (who did not attend those classes) is still active, and “knows how to run this business”.

Consider this analogy of five monkeys: Start with a large cage containing five monkeys. Inside the cage, hang a banana on a string and place a set of stairs under it. Before long a monkey will go to the stairs and start to climb towards the banana. As soon as he touches the stairs, spray all of the other monkeys with cold water.

After a while, another monkey makes an attempt with the same result — all the other monkeys are sprayed with cold water. Pretty soon, when another monkey tries to climb the stairs, the other monkeys will try to prevent it.

Now, put away the cold water. Remove one monkey from the cage and replace it with a new one. The new monkey sees the banana and wants to climb the stairs. To his surprise, and horror, all the other monkeys attack him. After another attempt, and attack, he knows that if he tries to climb the stairs, he will be assaulted.

Next, remove another of the original five monkeys and replace it with a new one. The newcomer goes to the stairs and is attacked. The previous newcomer takes part in the punishment with enthusiasm!

Likewise, replace a third original monkey with a new one, then a fourth, then a fifth. Every time the newest monkey takes to the stairs, he is attacked. Most of the monkeys that are beating him have no idea why they were not permitted to climb the stairs, or why they are participating in the beating of the newest monkey.

After replacing all the original monkeys, none of the remaining monkeys have ever been sprayed with cold water. Nevertheless, no monkey ever again approaches the stairs to try for the banana. Why not? Because as far as they know, that’s the way it’s always been done around here.

Is this analogy similar in your heavy duty shop, or company? Is it holding your business/company back today? The previous generation, the current “real authorities”, won’t change, or keep up to date, with new understandings in our ever-so rapid changing industry. In their minds, they have “been there, done that, only have another 3 to 5 years, and then I’m out of here”. They continue to stay with the standard, old thinking, old routines, in their day-to-day motions, yet profits keep dropping. It is time to come to grips with this. It is time to address this. It is time to move away from this attitude. “Vision with clear understanding”, is required to begin securing our future. It is time to go for the banana!

Consider sharing this article with the “real authority” and be ready for the fireworks because no one likes gut wrenching change. Be prepared with your notes containing clear and documented facts so you can constructively talk things out. There are many within the HD aftermarket that must get out of the “dark ages”, the “rut”, and allow vitality, and enthusiasm to enter and get on with what is necessary. If we wait those 3 to 5 years that they want for their own self-serving interests, that is 3 to 5 years of progressive/development/constructive time lost forever. It is valuable time we need today, to insure we are here 7 years from now.

Are we thinking and talking today, within our business walls, about the potential HD electric vehicle, the HD autonomous vehicle, vehicle software platforms, the competitions strategy, the changing commercial business, the type of education and training we all need to do on a continuous basis so we are at the top of OUR game? Today’s “real authority” must be properly challenged with the facts in front of them, and if they refuse take action, invest in what is necessary, then you know where your own future is if you stay there. Tough talk yes, but we as an industry must start having tough discussions and back those discussions with solid solutions coupled with a proper time-line action plan because too many aftermarket lives and families are being affected with inertia, out of touch management.

Old management loves to blame the workforce or what they perceive is not available in the marketplace and how they don’t want to work or do anything anymore. Please wake up management; they want leadership with a clear vision that they want to BELIEVE in and be part of. When a workforce believes in the company and believes truly where it is going, productivity soars and results happen. People outside of the company looking for great companies hear about you, your vision, your culture and applications start to come in. Right now too many in the real workforce are struggling to find companies that have that leadership, vision and culture. To all “Real Authorities”, look in the mirror and your problem will be in front of you.

How is your 2019 going to develop? It is time to go for the bananas. The stairs must be climbed by everyone and if someone doesn’t want to climb those stairs including the “authority”, it is time to open that door and kick them out of the cage.