If there is one issue that permeates every level of the tire industry, it's the one featured in our May 20 issue: Mergers and acquisitions.
The recent trend of equity groups' buying into or acquiring additional dealerships has caused much consternation, not only for the turbulence these transactions inevitably cause, but also because these groups generally keep such investments for five to seven years before moving on.
Equity ownership can be a boon by enhancing the performance of the dealership; sharing and providing additional resources; and creating a positive working environment that may not have existed previously.
Conversely, some groups come in and slash resources, negatively revise benefits and worse yet, attempt to squeeze every penny out of the entity before gathering its windfall and moving on.
We have heard, anecdotally of course, of both of these scenarios playing out in the tire industry. Some swear by equity ownership, especially compared with the previous situation; others have told us some of the horrors, both for employees and customers.
Of course, equity groups aren't alone in their quest to grow. Other privately-run dealerships also have grown through the M&A route.
Those dealerships include Gills Point S; VIP Tires and Service; Tire Discounters; McMahon Best-One; Belle Tire; and Pomps Tire, among others. Each has acquired at least one location over the last 12 months.
Eric Gill, whose dealership has more than tripled the number of locations in the last five years, said the one common denominator that links his dealership with the ones he has acquired is family.
"They were all family-run and owned businesses that wanted to continue to be run like a family-owned business," Gill told us. "They wanted to make sure that the culture of a family atmosphere continued, and many of the former owners have continued on with the company in various capacities."
KC Crain, CEO of our family-run parent company, Crain Communications Inc., noted during a recent summit that family-owned businesses employ about 82 million workers and generate $5.9 trillion in sales, accounting for 62% of the U.S. workforce and two-thirds of GDP. Crain Communications has been family-owned and -operated for 108 years and counting.
The challenges of M&As are well-known: Merging two work cultures; adapting to and learning new practices, policies and operating systems; reconciling employee benefits; identifying synergies and eliminating redundancies, including personnel; and branding, among them.
The largest acquisition thus far in 2024 — Titan International's $296 million acquisition of Carlstar Group — is in the midst of tackling those issues, rather successfully, according to Titan CEO Paul Reitz.
"I have been particularly impressed by the enthusiasm I see from everyone at Titan and our new team members that joined us with the acquisition," Reitz said while commenting on Titan's recent financial performance.
"From top to bottom, our employees understand this vision and are working hard every day to make it happen. We have made a lot of progress integrating Carlstar's operations ..."
There's no reason to believe that the surge in equity groups acquiring more dealerships won't continue. You can bet your bottom tire rack that some of them will continue to be aggressive, interest rates be damned.
And those growing mom-and-pops that are out there also will be on the lookout to find and acquire other mom-and-pops that see that retirement nest egg on the horizon.
All of that affirms what we in the business already know: The tire industry is a great place to be.