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Archive for June, 2019

The Demystification of M&A – Part 4.a. SOPs in M&A

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In our previous articles, we broke down the numerous motivations from both a buyer’s and a seller’s perspective morn considering a merger or acquisition (“M&A”). Now it’s time to look at the M&A process.

There are exceptions to every rule, except the rule that there’s always exceptions to rules…

No two collision repairs are identical. Similarly, no two M&A deals are exactly alike. In the more than 100 closed deals that I have participated in (and the few hundred more that didn’t close), there was always a wrinkle, an exception. However, also like collision repair, there are certain steps that typically are followed in every deal – some SOPs. Here’s a breakdown of the major steps in the M&A process, and for those who have had an unpleasant marriage experience, please pardon the analogy:

Beautifying: Just like blueprinting a collision repair job, proper planning is critical to maximizing the outcome of a deal. For a buyer, this includes securing financing, ensuring the existing company is stable enough to function effectively, without the owner for an extended period of time, lining up key vendors, deputizing a deal team, etc. For a seller, the process begins months to even years earlier and is focused on areas such as having clean financials, tightening up operations so that the shop is meeting or exceeding widely-followed KPIs, shoring up key referral sources, vendors, and employees, and performing any deferred maintenance. Savvy sellers also assemble a dream team of advisors (i.e., a tax expert, transaction attorney, and a banker/broker if the deal is sufficiently large), and they perform the same due diligence on themselves that a buyer eventually would do. If there’s a skeleton in the closet, it’s far better for the seller to find it than a buyer.

Courting: Finding a deal means very different things to a buyer and a seller. Buyers tend to prefer exclusive deals, those deals that no other buyer is involved (a.k.a., “non-auction deal flow”). This requires a proactive, disciplined system of regularly contacting potential targets, along with playing an active role in the industry by attending events, like the HD Repair Forum. As for sellers, the process of identifying a potential buyer is very different. Oftentimes, this is left to the seller’s banker/broker; DIY sellers typically reach out to people they know, including peers and competitors. The critical take-way at this stage is to preserve confidentiality. Once the word is out that a shop is for sale, referral sources get concerned and key employees (i.e., those most desirable by your competitors) get mobile.

Dating: Once a few potential suitors have been identified, it’s time to spend some time together. Shrewd buyers will ask for as much data as possible about the seller’s referral sources, financials, customers, employees, and facilities & equipment. Shrewd sellers will already have this package prepared and formatted to tell a story that makes the business look most attractive to potential buyers. This may require different versions if there are multiple types of buyers. Typically, a walkthrough also occurs at this stage so the buyer can assess capacity and necessary capital expenditures to integrate it into its existing operations (Note to sellers: conduct the walkthrough at night!). The buyer’s goal at this stage is to complete a valuation of the business and identify the key deal terms.

Our next article will focus on the latter stages of completing a deal. Stay tuned!

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!

Heavy-Duty Truck Repair Provides Limitless Opportunities to Rural Business

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In 2002, Chris Lindstrom started Practical Applications, a specialty manure handling and spreading business in Durand, Wisconsin. He managed a fleet of semis and truck-mounted spreaders designed to handle any size field at any distance from the client’s farm.

Two years later, he expanded his services, acquired another facility and started Maxville Truck and Repair. Maxville now offers custom truck builds and truck alterations, silage, grain and TMR trucks, and new truck sales.

His niche was noticed from hundreds of miles away. The business grew rapidly via word of mouth and reached areas such as Iowa, Tennessee, Kentucky and even Australia. Through the growth, Lindstrom recognized a need for heavy-duty truck repair.

After 10 years of coordinating with outside painters and sandblasters, Lindstrom was ready to expedite the process and bring painting services in-house. He reached out to local paint booth manufacturer, Global Finishing Solutions (GFS).

“I didn’t do any shopping around,” Lindstrom said. “GFS was down the road, and I knew they produced quality paint booths. I even trucked the paint booth over myself. It took two trips, but it was worth it.”

In June 2014, Maxville Truck and Repair started up their new 18-by-16-by-50-foot drive-thru crossdraft Heavy-Duty Truck Paint Booth for the first time. Since then, Lindstrom has stuck to the same paint scheme for his fleet of trucks — Massey Ferguson Red, black and a silver/gray metallic.

“With our truck paint booth, we produce consistent, clean and quality work,” Lindstrom mentioned. “It has improved our image 100 percent.”

In a dirty business like manure, it is going above and beyond that makes Maxville stand out — as a supplier and an employer.

“The paint booth isn’t for me, it’s for my people,” Lindstrom added. “My drivers take pride in what they’re doing. They look professional and they put out better work. I also didn’t want my people spraying in an unsafe and dirty environment.”

Lindstrom is a jack of many trades. He builds and paints hose reels, fabricates bumpers, and paints custom trucks and trailers. With sandblasting and painting services in-house, there is not much they cannot do.

“I don’t buy anything new,” Lindstrom said. “We have the ability to put anything together. We can fix it up and make anything look good.”

Since the addition of their truck paint booth, Lindstrom has also noticed he is able to rapidly turn trucks over.

“Our truck paint booth has definitely shortened the time it takes to get trucks done,” Lindstrom explained. “It has improved how I look with my fleet. It’s pretty cool that I can make my stuff look awesome.”

Heavy-Duty Truck Repair Pays Off

Businesses that perform heavy-duty truck repairs are hard to come by, especially in rural areas. When an oversized vehicle is in an accident, the nearest shop with a paint booth large enough to accommodate it is sometimes hundreds of miles away.

Although Maxville is not positioned directly off an interstate, Lindstrom saw the potential in adding a truck paint booth. Without a single competitor within two hours, he is able to assist his customers in repairing large vehicles. Depicted below is a $10,000 to $12,000 truck job, which can be a week’s worth of work for the company.

The purchase of a heavy-duty truck paint booth is a game-changer for most shops. Not only does it increase the physical paint booth footprint, it can also boost their bottom line. Maxville Truck and Repair is a prime example, as they can accommodate practically anything that is oversized.

HD Repair Forum Secures Plans for 2020 Event

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Plans for the third annual HD Repair Forum have been confirmed. The 2020 event is scheduled for March 24-25 at The Worthington Renaissance Fort Worth Hotel. Registration will open in the fall of 2019. To keep up to date with the HD Repair Forum’s agenda, speakers, and current news in the commercial vehicle collision repair industry, sign up for the monthly HD Repair Forum newsletter.

“The HD Repair Forum brings together all stakeholders from the heavy-duty collision repair industry. The event provides attendees an opportunity to discuss trends, address industry challenges, and evaluate key business strategies.” explains Jennie Lenk, Communications Manager for the HD Repair Forum.

The 2019 event saw significant growth from its inaugural meeting, proving the HD Repair Forum, with the guidance of its advisory board members, is addressing the needs of the industry.

A few of the highlights from the 2019 event included presentations from Daimler, Navistar, Peterbilt, Volvo, Heavy Duty Manufacturers Association (HDMA) and I-CAR. Session topics focused on a myriad of industry issues such as advanced driver assistance systems (ADAS), electric and hybrid vehicles, liquified and compressed natural gas vehicles, and a panel of insurance executives discussing claims handling and industry collaboration.

“Attendees also witnessed a historic announcement and well earned recognition, as I-CAR acknowledged Penske Truck Collision of Norcross, Georgia, as the first-ever commercial vehicle collision repair facility with an I-CAR Gold Class certification,” states Lenk.

In addition to presentations, attendees gathered valuable knowledge for business sustainability and growth in a series of breakout sessions designed around process improvement and profitability.

Companies interested in participating can do so through sponsorship and advertising opportunities that are now available. Call 281-819-2332 or visit the website for more information.

Interested in getting more involved, or even hosting a co-located event? Send your inquiries to Brian Nessen or Jennie Lenk