John Hopkins, executive chairman and CEO of Truck Centers Inc., a heavy-truck dealership and service chain, says there's been a lot of consolidation going on in his industry, one that relies, at least in his view, on acquisitions for growth.
“We participated in [a number] of those thus far and we hope to continue to participate in those in the future,” Hopkins said when he spoke at the St. Louis Smart Business Dealmakers Conference this past year.
But while he expects to participate as an acquirer, selling is the furthest thing from his mind, even though the industry is seeing high multiples derived in part from supply constriction.
When Hopkins took over the business in 1976, he said it was in a bankrupt position. The bank, however, allowed him and his older sister to pledge the equity in their homes, which was about $15,000 back then, and it was able to succeed from there.
Since then, Hopkins has two children who have a very active interest in the business and are of the belief that they’re never going to sell the business. So he’s worked on plans to get them involved, leaning on peer groups and outside experts to find the best organizational plans and how to fit the next two generations into the business in a way that best leverages their abilities.
“Using all those resources that are available to us and learning from our peers and what they've done and what they've not done really has been really helpful to us,” he said.
One of the things he said he learned early on about running a family business was that he was not going to have family members involved unless they were absolutely passionate and wanted to be a part of it. And similarly with company stock, Hopkins said no family member would own stock in the company unless they're engaged and active, and planned to stay in the business. They’ve also employed buy/sells should any family member leave the business then the stock is required to be sold back at pre-established valuations.
That long-term mindset of continuing as a family business has had at least one trade off.
“Developing wealth was never important to me,” Hopkins said. “What was important to me was always to really just provide meaningful dignified jobs for the families that worked for us.”
Because the monetary piece wasn't as important, Hopkins said that hindered the company in some ways.
“We didn't develop the capital and equity that perhaps others like my peers may have done,” he said. “And now this next generation is understanding importance of that capital and the need for that for consolidation as we go forward, again, because the only way we can grow is through consolidation through other states.”
For the business to stay competitive and continue to be a means to and end for the family and its employees, Hopkins said the company may have to double in size.
“We're going to have to do that through acquisitions, which means substantial boodwill, which means you better have some capital and equity in order to do that.”