Over the years, Rhett Ricart has honed his mergers and acquisitions strategy, buying and selling dealerships to keep the mix fresh.
“Like any entrepreneur, you evaluate every opportunity,” says Ricart, CEO and dealer principal at Ricart Automotive. “Sometimes an opportunity isn’t buying something; sometimes an opportunity is selling something.”
He has years of experience doing both.
“We continually change franchises, mix them around depending on what our customers want,” Ricart says of the company that has sold more than 15,000 vehicles a year for the past decade to meet the needs of its 200,000 active customers.
Smart Business Dealmakers spoke with Ricart about his M&A strategies, as well as the family business’s succession planning.
What principles do you follow when buying or selling businesses?
Everybody has bricks and mortar, but you also have to evaluate your talent pool. What kind of talent do you have available? How hard do they want to work?
Because in most cases, when you buy an acquisition, your workload doesn’t go down. It usually goes up. So, you’ve got to decide: Does everybody want to go to the next level? It’s a team sport.
I like to have a coffee or a lunch off site with the owners of the company and say, “Hey, does this make any sense?” Because in our case, we like to make the product better. We’ve never bought a car dealership or anything else and torn it apart — separated the real estate and fired all the people, sold one of the franchises but kept the other. We don’t do that, ever.
We try to make it better for everybody, not only the employees, but also the customers that have been going there all those years.
Do these types of deals happen quickly?
Most mergers and acquisitions don’t happen by phone call, where they run over and say, “Hey, yeah, that sounds like a great idea. Let’s go do it.”
These entrepreneurial businesses, like automobile dealerships, which are in most cases family owned, are tied to the family and the family’s legacy. People need some time to think about it, and that goes for anything, a restaurant or anything that has any type of legacy with it.
It’s a very emotional decision, so you have to respect that and be prepared to handle it in a timely manner. And if it works out, fine. If it doesn’t, there’s always another opportunity.
So you need buy-in not only internally from the Ricart team but also from the dealership that you’re buying?
Yes, because we want to keep the people. Like in the Harley-Davidson deal, in which we bought three locations in June, we haven’t lost one person. We’ve been there for three months. I don’t plan on losing anybody. I want to keep everybody they have.
We made a couple of other acquisitions of finance companies. That’s a little different animal, but in the transportation industry, like Harley-Davidson, we keep everybody because they’re important.
Was buying the Harley Davidson dealerships a leap for an automotive business?
Our family is in the transportation industry, and the transportation industry is not only just cars and trucks. We do fleet business with fleet customers. We do financing automobiles, and now we do motorcycles. If it’s got a wheel on it, it rolls and it gets people from A to B, our family’s pretty well ingrained in that industry.
We don’t invest in active investment. Our investments are either in the stock market, or we invest in real estate and/or the automobile business and finance business. We don’t get involved in speculative office buildings and things like that. That’s just not our bailiwick. We know the car business. We know the automobile industry. We know the transportation industry. We really know it, so that’s our safe harbor and that’s where we’re successful.
How are you and your brother developing the next generation of leadership?
We have a family council. We meet a couple times a year, and we have it facilitated by a gentleman from Syracuse, New York, that I found, Jim Dance. He works for the National Auto Dealers Association. He comes in and he discusses leadership and interviews all the family members, asking how they like what they’re doing and how their goals are being met, etc. It provides another person to talk with the family members other than myself.
I also encourage any small, medium or large business owner to take advantage of the resources of the Conway Family Business Center to help coach you through succession planning, because everybody thinks an estate plan is your succession plan. And that’s not true — they are two different things.
Are you doing anything differently with this succession plan, compared to when your father handed over the reins?
My dad waited until he was 50 to do a will and a succession plan. If he was smart, he would have, like all of us, done it earlier on — started around when you’re 40. You should have had some sort of wealth built by the time you’re 40, and then that succession plan, you need to be thinking about it every day.
One of our biggest mistakes was not asking my dad earlier to have a more definitive, written-out succession plan, versus, “Well, I think this is what I want to do.”