When an acquisition or merger of a farm equipment dealership takes place, the focus is usually on appraising used equipment, evaluating parts inventory and transiting assets.
The precision farming business, however, deserves more attention.
The post-acquisition integration of the precision aspect of the business can be difficult, due to each dealership having its own unique model, culture and personalities. The complexity lies in how integrated precision ag is into other departments or if it’s a stand-alone department, not to mention that of all the areas in a dealership, precision is evolving at the fastest rate.
“Numbers and people are important,” George Russell, founder of the Machinery Advisors Consortium says. “You have to look at the financials and the bench strength of the precision team, but in an acquisition it’s vital to assess what the culture is as well.”
Russell advises observing how well departments work together. Is there a sense of urgency in solving a problem and how fast do staff move in general? Look at the competency of the precision staff and how confident they are in working with customers.
He says it’s important to assess the staff, to get a clear picture of their potential career pathway. “They are not likely going to be precision staff forever,”
He recommends evaluating the talent and bench strength of the precision team during the due diligence phase, so once integration begins these employees’ roles can be restructured if necessary and ensure they are properly trained.
Sit down with staff to understand their aspirations and look at their capabilities, seeing how that could fit in to the new organization and into the future. Precision staff often have skills that transition into second tier technical support, a sales representative or service manager.
10 Precision Business Questions to Ask Before an Acquisition
Acquisitions are overwhelming. Asking these questions early and to more than one person can prevent misunderstandings due to miscommunication.
- What is the primary focus of precision in the acquiring dealership?
- Where does technical support of precision live?
- Who is the primary customer contact for precision sales and services at each current location?
- Do precision staff bill service hours the same and evaluated the same by management?
- Are the precision staff allocated to sales and service across areas or by singular location?
- What type of precision support is expected within other departments and have those expectations been clearly defined?
- Where is the majority of the dealership’s precision inventory stored, how accessible is it and does it need to change?
- How, when and where is customer training handled?
- Who decides where trade-in components go, who values them, where are they stored and how are they accounted for?
- How are precision employees from the acquired dealership going to be evaluated (performance, cultural fit, area need)?
PrairieLand Partners Precision Ag Manager, Jeff Allison, came into the dealership though a merger. After having 9 locations for almost 13 years, PrairieLand acquired Concordia Tractor’s 4 locations — where Allison worked — in 2018. In 2020, PrairieLand added two more locations to their John Deere dealership, which now totals 15.
If there is one thing Allison would do different, is it spend more time getting to know the new individuals on his team.
“So much time is spent training, learning, supporting and too little time getting to know staff and what it is they want to do,” Allison says.
“Millennials especially will want to know their career path,” Russell says.
Merging the Precision Focus
Allison says a key part in the first acquisition was getting everyone in the same room as soon as the letter of intent was signed.
“Everyone in precision ag from both dealerships were brought together, four months prior to the closing to meet each other in person,” Allison says. “We discussed processes on both sides, learned each person’s background, heard the successes and challenges faced and figured out where everyone lived so that we could begin to start working on the new structure.”
When configuring the new department, more often than not, there isn’t enough staff to meet the needs of expanded organization. The solution for PrairieLand was placing staff in temporary positions to fill immediate needs.
“In our 2020 acquisition we needed a precision specialist immediately for those two locations,” he says. “We had to move our product specialist into that role for four months until we filled it and he actually then moved him into a sales position.”
Nick Rust, Precision Ag Coordinator at H&R Agri-Power likes to ask, ‘in that market what can I justify?’ He analyzes precision needs on a location-by-location basis. H&R Agri-Power, a Case IH dealer, have acquired seven locations in five acquisitions since 2015 resulting in 17 total locations and are currently involved in the merger of their 18th location.
Ideally, Rust wants to ensure the company can generate twice as much margin as what they pay precision specialists in salary.
In some instances, H&R has acquired precision staff who were in dual roles, splitting time between precision and sales or parts. Rust hasn’t seen that be too successful.
In those cases, it makes more sense to fill the new locations precision needs from other adjacent locations.
What Works Well
Allison believes digging deep into the details of precision processes can make the transition smoother for all areas of a dealership and Rust agrees.
“Precision ag is tied to every segment of the business. We order parts, we install parts, and we work with wholegoods salespeople to sell iron,” Rust says. “Frankly, some of the processes we do are the same processes the other departments handle.”
Allison adds, “Since precision touches every department, if you are able to identify process, programs and people that integrate throughout the dealership that can help other departments.”
One way PrairieLand did that was by creating an ‘AMS Parts Guide’. The parts PDF is broken into categories with parts numbers and descriptions for parts staff so they can quickly identify precision related parts for customers.
Retaining Precision Independence Post-OEM Dealership Acquisition
Independent precision farming dealers tend to take pride in their flexibility and freedom to customize technology solutions for customers, often leveraging a personal touch as a competitive edge.
This is the advantageous position Ben Flansburg found himself in 13 years after founding BCA Ag Technologies, a flourishing independent precision business just outside of Buffalo, N.Y. Having established a reliable reputation, Flansburg began an informal partnership with LandPro Equipment, a growing John Deere dealership operating in New York, Pennsylvania and Ohio.
“At the time we started working with them, LandPro didn’t have much of a precision department and they would sell new tractors to customers and then send them to us to install an Ag Leader GPS system,” Flansburg says. “From there, we developed a good relationship with the dealership as a precision resource and referral outlet.”
As LandPro grew to 21 locations, so did the need to accelerate its investment in the precision side of the business. In December of 2017, LandPro’s ownership approached Flansburg about selling the business. LandPro is owned by an investment group based in Atlanta, Ga., and Flansburg says they determined the most efficient path to precision expansion for the dealership group was to buy it, rather than build it.
Flansburg admits he was in no rush to sell, with 5 full-time employees on staff and operating a 15,000 square foot showroom and training center. So he took the entirety of 2018 to work through the details of the acquisition with LandPro, wanting to retain core aspects that made BCA successful, while also adapting to the OEM dealership’s precision brand-building goals.
One of the key inclusions in the agreement allowed for BCA to continue its existing relationships with its precision vendors, including Ag Leader, 360 Yield Center, SoilMax, Precision Planting and Smart Ag (now part of Raven Autonomy).
“We had good relationships with our existing vendors, an established agronomy department, we provided soil sampling and variable-rate services to our customers and we didn’t want any of that to go away,” Flansburg says. “We understood it wouldn’t be the core focus of LandPro’s precision business, but if we were going to bring our whole customer base over and just be expected to exclusively sell all Deere GPS equipment, I knew it wasn’t going to work out.”
The other acquisition details included retention of the BCA Ag Technologies name for 2 years and that Flansburg fill the role of Integrated Solutions manager. “I wasn’t accustomed to working for someone, so being able to directly report to the CEO, whose confidence I have, was important,” he says. “We got everything down on paper and made sure it felt right on both sides.”
The acquisition was finalized in January 2019, and that first year was largely a transitional period, getting BCA’s precision staff integrated into LandPro and building relationships internally with salespeople and solidifying external ones with customers.
Flansburg says one of the dealership’s 8 precision specialists often accompanies a LandPro salesperson on customer visits to provide a technology tutorial and be an on-farm resource to support the sales process.
“I have a solutions-driven mentality when it comes to our customers,” Flansburg says. “That might directly result in selling Deere technology to them, but it might not. I’ll make customers aware of other options, if it’s the right one for their operation.”
Indirectly, Flansburg says he’s seen the economic benefit of his team’s solutions-first approach. He offers the example of installing an Ag Leader down force system on a used corn planter to increase the value and efficiency of moving it to make room for a new piece of equipment on the lot.
“It’s been a unique path, and 2019 was largely a transition year, getting comfortable an organized,” he says. “In 2020, we’ve seen the precision business really advance and it’s been a good strategic move for both organizations and certainly for our customers.”
– Jack Zemlicka
Another deep dive Rust recommends is looking at the new locations data — inventory tracking, P&L and sales history.
“We make buying decisions and how to grow the department based on data,” Rust says. “If precision components are not entered in the business system or not in the correct way, we don’t have good data and the credit isn’t on the profit and loss statement.”
Precision components become obsolete the quickest. So, Rust looks at the sales history and parts turn for those components. He finds there are often teachable moments for the staff at newly acquired stores in reviewing that data.
It’s an opportunity for them to understand they now have access to precision inventory across the entire organization, so they may need to change their ordering mentality.
Identifying the person responsible for precision ag parts at each new location before closing takes place allows time to resolve potential problems before they affect the business.
But everyone agrees, customers do not like change. They do not necessarily see the benefits of the new, larger organization unless they are highlighted to them.
Allison likes to take all the precision staff to customer events the first year after an acquisition in addition to meet and greets at the new locations to allow customers to meet the entire precision team.
He does that to demonstrate the size and strength of the precision team. Customers learn that even if their person isn’t available or doesn’t have the answer, they have this team to pull knowledge from.
Expect the Unexpected
“There are always those things that you don’t find out, until you do find out,” Allison said. After one of PrairieLand’s recent acquisitions, he discovered a physical RTK tower had been grandfathered into federal rules and regulations. Due to the change in ownership, it fell under a new set of rules, which resulted in the need to upgrade the lighting package on the tower, which cost several thousand dollars.
Allison had another situation where the dealership they were acquiring wasn’t charging for precision support, in the same manner PrairieLand did. They covered those new customers with their support package for the first 6 months for free.
“We used that as a trial for them and it worked well. I was fearful, because we had these customers not paying for the service, but it really went well,” Allison says. “There was very little pushback and when you look at numbers there wasn’t really much difference.”
After crunching the numbers for 2020, which was the first year the new customers had the opportunity to buy the support package, Allison found that these new locations ranked third and eighth out of their 15 locations in the number of customers signing up for the package.
“I don’t think there is a way in the negotiations to uncover all the little nuances that have been going on for the last 20 years,” Rust says.
A radio-based RTK network was purchased as an asset in one of the H&R Agri-Power acquisitions. When Rust went to decommission it because it wasn’t going to provide ongoing value to customers, he discovered the previous dealer had sold 2 lifetime subscriptions to that network.
Rust personally met with customers affected, explained the circumstances and asked how H&R could meet their expectations going forward. The dealership ended up giving the base station to one customer and for another, provided 10 years of free RTX coverage on the units he currently had.
“If they are a paying customer, there is a cost of doing businesses. It’s a matter of what is it going to take to make that customer happy,” Rust says.
Russell says to prevent potential customers issues, post-acquisition, hold a meeting with all staff who are contacts for key customers. Get the location manager, parts manager, service manager, precision staff and any others in a room to go over those customers’ arrangements with dealership and their expectations.
This allows for potential issues to be identified and proactive plan to be developed instead of a reactive one.
What I’d Do Different
Allison says, if he had it to over again, in that meeting with the entire precision team from both dealerships, he would have made each person write down every process they were involved with.
“From what they do in their office first thing in the morning, how they interact with salespeople, how they interact with parts people to how they interact with the computer system,” Allison says. “We should have taken a harder look at those. We looked at the big ones, but we missed the smaller ones and had to go back and then figure out how to merge those.”
It’s critical to make sure everyone has access to the systems and resources they are accustomed to. Any interruptions to these create roadblocks to them being able to do their job.
Don’t get caught up in the day-to-day. Evaluate what it is you want to accomplish within the new department and look ahead to 2-5 years down the road, Allison says.
“As a manager, ask ‘What are we integrating them into? Is that the direction you want to go or is it time to reevaluate? So we don’t add something in and then have to change it again,’” he says.
When H&R acquires a dealership, they send staff to the new location or locations for a week to train the new staff on their processes. Rust feels the effectiveness of that is based on how many of their current processes are documented and correct.
He says training could be more successful if there was a designated onboarding team of the same people doing it for each acquisition, delivering a consistent message.
Russell says that when owners and managers from the existing organization are coming into the new organization it’s important the first-year plan is clarified before the deal is done. This includes how the dealership is going to be run and who will hold what management roles.
“In acquisitions that don’t work well, there is usually a good vision, but the issue is they didn’t implement well. The organization ultimately didn’t execute their plan,” Russell says.
Most acquisitions are handled by the executive team, limiting the involvement of the expanded management team and staff with the boots on the ground. However, the key to integration of the precision farming business is getting the larger staff from both sides involved sooner leading to greater visibility that ultimately has an impact throughout the dealership.
After the Ink Dries: Dealer Takeaways
Precision Farming Dealer’s sister publication Farm Equipment published a special report in 2016 (After the Ink Dries June Showcase 2016) which provided a roadmap of best practices and pitfalls to avoid before, during and after the acquisition process.
Because dealers have had a wide variety of experiences when it comes to handling matters following the acquisition of another dealership, there was little if any clear-cut consensus on one “best” approach to some of the biggest and most critical issues involved. Integrating one business culture into another is often more of an art than it is a science.
The takeaways are as relevant today as they were 5 years ago and below we share some of the best advice pulled from the experiences and outcomes of recent dealership acquisitions.
These takeaways, which are often unique to a situation or personality driven are labeled “Decision Time Takeaways.” In other cases, there was a general consensus about best practices that produce the best results. These are labeled “For Sure Takeaways.”
Decision Time Takeaways
Keep or Replace Store Management?
- Keep: Maintaining prior ownership and/or managers provides continuity for customers and a certain comfort level for employees at the store being acquired. As one dealer said, “A new broom sweeps clean, but the old one knows where the dirt was.”
- Replace: It’s difficult to make needed changes without a change in leadership. In some cases, previous managers will actively work against any changes implemented. Have a top manager from the acquiring organization who is capable and intimately familiar with the company culture head up the integration.
- Middle Ground: If previous ownership or top managers are kept on, don’t leave them at the acquired location. In all cases, establish an exit plan strategy ahead of time that can be exercised if dealing with the processes, procedures and perceived bureaucracy becomes too much.
Make Major Changes Quickly or Slowly?
- Quickly: Rip the bandage off. Get changes over with quickly vs. trying to transition over longer periods of time. Leave no doubt that there is new ownership and things are changing.
- Slowly: Take time to get to understand the existing culture and business processes. It takes time to get everyone involved and on the same page. Consider the impact of abrupt changes on customer perceptions.
- Middle Ground: Do more homework upfront, prior to acquisition announcement to get a solid foundation for making personnel and other business decisions. This could negate the need to make big, painful changes all at once.
For Sure Takeaways
- Discuss each employee with the previous owner to determine who should stay on and who should be let go. He knows their strengths and weaknesses. This may also reveal employees who should’ve been terminated previously.
- Give employees a week to review company policies, handbook and benefits package prior to the acquisition being completed. This will help familiarize them with your expectations, and decide if they want to continue with the re-hiring process.
- Be careful of announcing the acquisition too early. It could leave employees with a lot of questions and be a distraction.
- Create a checklist/integration plan to keep track of the tasks that must take place to bring the acquired company into your dealership. It should include everything from changing signs to training employees on your business software to changing decals on service trucks.
- Demonstrate that the change is permanent by making permanent changes, like sprucing up or remodeling an older facility.
- Assign a current employee as a point person to mentor their new colleagues and answer questions that may pop up as new employees assimilate into the new culture.
- Make the acquisition announcement to both your own employees and the acquired dealership’s employees in the same day to keep rumors to a minimum.
- Key customers of the acquired dealership should be notified almost simultaneously as employees, to let them know they’re important to you.
- Make sure employees know how to answer customer inquiries and are passing along the same message. At all costs, make sure employees are giving out accurate information.
- Get out to the customers for face-time. Communicating what the new parent company is all about, listening to their likes/dislikes and engaging them in the integration process will help ensure the don’t go elsewhere if there’s doubt or uncertainty.
- Hold formal “focus groups” with key customers ASAP. Groups shouldn’t be too big; 3-5 customers per group is best.
- A post-acquisition culture study can establish a baseline for how employee values align with the dealership’s core values.
- Dividing a growing dealership group into regions can keep oversight and communication manageable, while allowing for growth. Establish regional managers to serve as visible corporate touch points for employees and customers, who oversee operations for a 3-4 store group and report to ownership.
- Integration is a team-job, not one individual’s. Assemble a group who communicate, be accountable and work the problems down, not size them up, but having one integration manager is advised.
- The public celebration bringing together all employees and customers is more important than you might think. Don’t dismiss it as a “party planning exercise.”
- Have the newly acquired staff spend a week in an established location and vice-versa. Acquired employees will see the new operating system at work, and the established personnel will better know the paradigm of the newly acquired stores.
- Due diligence can only tell you so much. Inspect and verify, especially when it comes to processes, how they are followed, and the extent to which they are followed. The computer system may have wide variations in use.
- Don’t go it alone. Your fellow dealers, peer groups and management consultants can all help you identify common issues and how to be as prepared as possible to deal with them.