In conversation with Mike McCarron Part 6: Making the adjustment
This Wednesday, Mike McCarron, the colorful former owner of MSM Transportation will team up with M&A guru Doug Nix for the much anticipated session “Mergers & Acquisitions in Transportation: How big are the opportunities?” at our Surface Transportation Summit.
The session, moderated by publisher and editorial director Lou Smyrlis, will provide insights for both potential buyers and sellers. It is one of several sessions planned for the all-day event, which has already drawn more than 300 carrier and shipper registrants.
About a year ago, in a move that caught the industry by surprise, McCarron, at the age of 52 and in the midst of considerable business success, sold MSM Transportation to Wheels Group for $18.6 million. Executive editor James Menzies caught up with him shortly after for an exclusive story that revealed the reason for the sale, the significance behind its timing, and what he learned, we are re-running the 7-part interview.
To find out more and register for the Surface Transportation Summit, to be held this Wednesday at the Mississauga Convention Centre click here: www.surfacetransportationsummit.com.
In the meantime, enjoy Part 6.
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.
TN: Should we read into that then, that Wheels is looking to acquire more companies and continuing to grow?
McCarron: Wheels went public with a plan that they would like to grow their business organically and through mergers and acquisitions. A big part of buying MSM was consolidating the third-party space. Like Doug and his management team, I think there will be a tremendous opportunity. What I believe is, when you look at the demographics of the third-party business, that all these freight brokerage entrepreneurs who were getting to be 55, 60-plus years old, are going to want to retire at the same time. The question is, who’s going to buy them?
I want to investigate that market to take advantage of the demographics in the industry. Look at the freight brokerage business; there are no contracts, it’s all goodwill, it’s all handshake deals and it’s all transactional.
You don’t pay for it and if you look at freight brokers, that’s all they have. Also, I think a lot of people are tired; they’re worn out.
If you look at things historically, when business goes bad, the smaller, weaker third parties tend to get gobbled up because they get rationalized out of the supply chain.
My goal here at Wheels is working with the rest of the management team is to build programs that allow us to consolidate a lot of these Canadian and American third parties when it comes time.
It’s a pure probability model. I can tell you whose going to retire, why and how, I just can’t tell you when. So part of this is creating some services for the owner/operator, single sales rep that’s looking to get out and even for the larger freight brokerages. I think what they’re going to find, like we found, is that as this industry continues to age, it’s going to be far more difficult to get out, because there’s going to be a glut in the market and there aren’t going to be a lot of buyers.
– In the conclusion of this interview, we ask Mike what business owners should be doing now to plan their exit strategies
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