Mike McCarron, former owner of MSM Transportation, will team up with Doug Nix of M&A on October 16. Last year in a movie, despite business success, McCarron at 52 years old sold MSM for $18.6 million to Wheels Group. Below is a 6-part interview with McCarron concerning the selling of MSM during the Surface Transportation Summit.
PART 1: Why MSM was Sold
TN: Mike, at 52 years of age, you’re a pretty young guy to be selling your business. You’ve still got some years ahead of you. Why’d you decide to sell this year? Should we be reading into the timing in any way? Are you down on the industry and where it’s headed?
McCarron: There were a bunch of factors. With MSM, we got to the point where we realized we were too big to be small, but too small to be big, which is a very difficult position to be in. We felt that in order to get the business to the level where you get true economies of scale, we were going to have to invest a lot of money into the business; a lot of money that my partner (Bob Murray) and myself didn’t feel like risking, frankly.
PART 2: Finding the Right Buyer
TN: How did you identify Wheels Group as a good fit?
McCarron: Wheels and MSM have a long history together. We were two of the first transportation companies to become one of the 50 Best Managed Companies about 17 years ago. We were both major customers of the same software company, so we worked a lot with them developing programs over the years. We’ve done a lot of business over the years. And chairman and CEO Doug Tozer is not only a neighbor of mine, but we grew up in the same neighborhood, so he’s been a good community friend for over 30 years.
PART 3: Negotiating the Deal
TN: So, once you identified Wheels as a strategic fit, what came next? Did you sit down in a boardroom like this one and hammer out a deal?
McCarron: The first thing we did was hired an investment banker, who helped us maximize the value. They can be very expensive, but I like an investment banker almost as an agent for a hockey player. People say “Why does a hockey player need an agent?”. The problem with negotiations is they can get difficult, and they can get personal. You have to be very careful because when it does get personal, if you are involved in the negotiations you can sometimes take it too personally and set the negotiations off. We felt that working with an investment banker, their experience was great, they helped us work through the legal jargon – in particular dealing with a public company – and they really helped us get to the finish line.
PART 4: The Biggest Surprise
TN: What was the biggest surprise about the whole process?
McCarron: Just how complex and difficult it is to get a deal done. The amount of detail, the amount of tension, the amount of planning, the amount of costs incurred, given the complexity of the deal. The other thing that surprised me was how difficult it is to have your management team focused on trying to get a deal done, while also focusing on trying to keep the numbers up on a day-to-day basis.
PART 5: Communicating the Deal with Employees
TN: When the deal was completed, how did you communicate it?
McCarron: We had a lot of direction from Wheels on that. Because Wheels is a public company, we had to be very careful about how we announced it. Basically, at the same time, after markets closed in Toronto and in the US, we had staff meetings and a press release was issued by Wheels.
TN: I imagine this was a real shock for your employees. How do you soften the blow?
McCarron: You don’t. It’s difficult. People are smart and they realize that jobs might get rationalized and things get condensed. So, rightly so, people are very nervous anytime a business is sold. We did everything we could to protect everyone’s job, but the reality is that Wheels Group has to do what’s best for their business and their shareholders. We can’t control that. What I said to our employees is that the most important thing is that if a company is looking to rationalize positions, they’re going to take the best employee, the person who works the hardest and the person who’s producing. They’re going to pick the best, so the key is to work hard like you have been, contribute, do your job and it’ll work out no matter where you go. It’s difficult, but I say this to people all the time: Unless your name is on the front of the building, you have no say.
PART 6: Making the Adjustment
TN: On a personal level, you started MSM at a young age and have spent most of your professional life owning your business. Now, you’ve cashed in, you’ve got money in the bank and you’re going to work for someone else. How difficult do you expect this transition to be?
McCarron: I just started this week. I’m only 52 years old. Frankly, I’m the type of person that with all the free time and a little bit of cash in the bank, it can be a dangerous if you’re not careful, because I’d get bored out of my mind. I don’t have to work anymore. I’ve been pretty frugal with my finances, money was never that important to me and nothing is going to change in my life. Five years from now, there won’t be a Maserati in my driveway. This wasn’t about becoming filthy rich and changing my lifestyle, the biggest thing for me was securing my family. The advice I kept getting was the biggest mistake you could make would be to head to the hills for four or five years, get bored out of your mind, then come back and nobody remembers who you are.
TN: Is this a newly created position?
McCarron: Yes, it is, with the Wheels M&A team.
MSM Transportation is a provider of commercial trucking and freight services. It was founded in 1989 and employs more than 150 people at different locations, including Los Angeles, Charlotte, N.C. and Bolton, Ontario. In addition to MSM Transportation, the MSM Group of Companies includes MSM US Transport, MSM Canadian Transport, MSM Dedicated Solutions and MSM Worldwide.