Skip Klinefelter began adopting precision farming technology 17 years ago on his 3,100-acre farm near Nokomis, Ill. He was frustrated with the lack of technical support offered by local dealers, so he became a precision technology dealer himself.
Now, almost two decades later, he is the owner of the fast-growing independent group, Linco-Precision LLC. In the summer of 2022, Linco-Precision joined forces with Bottom Line Solutions in Morton, Ill., to form one of the largest precision farming sales and service companies in the Midwest. Klinefelter’s company expanded its footprint even further in September 2022 with the purchase of Dairy One Cooperative’s precision farming assets in Ithaca, N.Y.
“In the last few years we’ve merged 8 companies,” Klinefelter says. “But this is what I enjoy; I enjoy the farming, and we initially got into this business because we wanted to have some precision tech on our own farm.”
Based in El Paso, Ill., Linco-Precision now has a presence in 12 states. Those 8 merger ventures ranged in sales from less than $100K annually to more than $10M annually. Klinefelter says the smaller purchases were beneficial, but even more, a good exercise in what it means to purchase a client base. Each one has been either a break even, better move in the short term, or a long-term benefit for the overall company structure.
“If you’re not growing, you’re dying,” Klinefelter says. “However, don’t grow just for growth’s sake.”
Klinefelter says it’s challenging and risky to find upward mobility in a small company. However, if you keep up, pay attention, hire and train both customers and employees, adopt, adapt, and don’t reinvent the entire wheel, everything will work out.
Build the Right Culture
“We are undercapitalized by someone who either didn’t, wouldn’t, or couldn’t understand our needs,” says Klinefelter, when discussing business growth. Linco-Precision was a 2-man shop when it launched over 30 years ago, and its growth has come with some hard lessons learned about team culture.
“You learn early on that personalities can’t change,” he says. “You might alter them, make them mad, even make them happy, but you aren’t going to change personalities. And you can’t teach passion; people either have it or they don’t.”
It’s also important to consider what a team will look like post merger, Klinefelter says. Are there toxic players who can be identified up front? That could even be part of the negotiation process. Who’s going to manage the turmoil and transition? Identify those people early on and equip them for the task, or hire consultants to guide the process. Even though you may get along with the new stakeholders in early meetings, that doesn’t mean there won’t be issues when the ink dries, he says.
When building a team culture, Klinefelter says business leaders should consider Price’s Law, which states that 50% of the outcome will be delivered by the square root of all participants. If your team has 10 people, 3 alone will do 50% of the work.
“What typically happens is those people are producing most of your output, and the rest are doing squat,” Klinefelter says. “Keep on top of that. You don’t have to have a bad attitude, but I was terrible at letting people go.”
Know Your Customer of the Future
Klinefelter tries to stay ahead of the curve when thinking about his customers' needs — he believes data specialists are the next big thing for dealerships.
“Whatever you do, you probably don’t have enough or they are not trained enough for what’s coming,” he says. “And those that don’t, better do it now, or start planning. It’s going to be a must.”
Precision technology is data driven, and so knowing about AI and understanding that side of it is just half the battle. Klinefelter says high-level thinkers are predicting 2 kinds of businesses will exist in 5 years: those that adopt AI and those that are out of business.
Another consultant told him that even if businesses choose not to adapt to new technologies, they need to understand they will be competing against those that do. Using “dumb data” isn’t going to cut it, as clients will be demanding smarter, predictive information that can make decisions on its own.
“Right now agriculture has an extreme seasonal urgency,” he says. “It has to happen and happen now as we make decisions in the field. How are we as providers going to deal with the mass and speed of data as we see things move forward?”
Be prepared and understand the customer of the future is not that of today.
“Today’s buyers are more technologically savvy, more digitally savvy, spend more time on their mobile devices, and want to engage on their time not yours,” Klinefelter says.
The challenge he says smaller dealers will face is the client who can (and will) pay for speed, convenience and ease of use. CRMs, remote sensing and remote access will help with this. If you don’t have that particular talent on your team, Klinefelter suggests you find it today to make sure you’re ready to serve the customer of tomorrow.
Have a Map Before Going into the Woods
Does the purchase help build your brand or confuse it? Is it a strategic fit? Those are the first 2 questions Klinefelter asks himself when considering expansion.
Even though Linco-Precision provides a bevy of services, the underlying function is as a precision consultant. If the extra business Klinefelter’s considering is a complementary service, it may make sense as an acquisition. However, it should not be a product or service that compromises the high quality the company stands for, even if it looks good on paper.
If they do things better than you, that can be a benefit too, Klinefelter says. This happened with Bottom Line Solutions, a company Linco-Precision acquired, but kept the name because they had a good reputation, good people, and a better name, he says. Klinefelter really liked their motto of “Trust in the Bottom Line” and is putting it on all company packages.
“We don’t try to force our name on somebody else that is really successful,” he explains. “When going into negotiations, have a map before you go into the woods.”
To make each product and brand shine, once the map is laid, it’s time to let the experts in each area make it happen.
“We have champions of each in our company; We have an OPI champion, a Trimble champion, an Augmenta champion, and an Ag Leader champion,” Klinefelter says.
In the merger contracts, he requested those high-level employees provide a longer notice if they want to leave. “These people are very important to the company, and hard to replace,” Klinefelter says, and adds that as the team and expertise grows, there are more people to pull from when unforeseen circumstances arise. It’s another level of brand protection, but also customer service and ensuring future success for all.
Determine the Metrics for Your Success
Know your boundaries early on when considering an acquisition, Klinefelter advises. How will you deal with unforeseen circumstances? What if the seller wants the blue sky and the clouds too?
“Someone will try to lie, cheat, steal, whatever; it’s human nature,” he says. “Be honest, forthcoming and fair. And use a good business attorney and accountant, even though they may not be the ones you have now.”
Then, look at the details: What is the inventory and its age? Don’t let that sink you. The same goes for established sales.
“You will have to deliver, install and support those booked sales,” Klinefelter warns. “You may end up losing money, so just keep that in mind, and also pay attention to any outstanding liabilities that may not show up on the books.”
Another caution: are some vendors going to be grandfathered and at what discount rate? When combining 2-3 companies it was beneficial to go to the table and negotiate margins upfront, and determine a combined company margin rate, Klinefelter says.
Also, he says that in his case half the companies expect service to be for free, while others pay for labor and mileage. Determine what’s what before signing.
How are territories handled? Commission? Employment laws for different states? And so on…
When all is said and done, know what success looks like to your organization and keep it in mind throughout the process, Klinefelter says.
Walk Away if it’s Not Right
Know the type of sale you’re looking at (assets only, the entire thing, or something in between) and also why the other company is for sale, Klinefelter says.
It could be untimely death, retirement, they need a change, but Klinefelter warns there are bad reasons too. Dead inventory, bad management, disengaged employees, to name a few. He says these factors need to be identified, but shouldn’t always sway the entire deal.
“Just have a plan before you get in the woods,” Klinefelter says. “Identify the players and decision makers, the management deficiencies and strengths, the geographic benefits and so on.”
A letter of intent to purchase has been a good way to get a little extra information from the seller, as has touring the facilities, seeing inventory, and even bringing in an accountant for due diligence, Klinefelter says.
“Don’t forget the end offer date either,” he adds. “Sometimes they want to stretch it out, or other times want to close it next week,” Klinefelter adds. High pressure for a short-term date is usually a red flag, and he says don’t be afraid to walk away if it doesn’t feel right.”
Give Only Your Best Yes
Klinefelter shares the following repeated message to both the tech and equipment teams at Linco-Precision, and one that keeps them focused on the goal.
“It is our job to provide for our clients’ needs with the quality they need, in the quantity they need, as often as they need it, in a financially attractive package. No more. No less.
“And if you’re doing either one of those off the side, you’re either cheating the customer, yourself, or both. So it’s our job. Good luck planning.”