- Marsden Holding Sees National Growth
- Unique Acquisition Strategy Pays Off For Contract Cleaner
Remembering Customer, Employee Concerns When Buying Businesses
The third part of this three-part article examines how Marsden Holding handles the concerns of all parties involved in a sale.
None of this is to say that there haven’t been mistakes made and lessons learned through the years of acquisitions.
Marsden Holding’s first few acquisitions were more informal, because the company already knew the sellers quite well. But as Marsden Holding began acquiring BSCs outside of the Minnesota-Iowa market, Mingo and company soon found out they weren’t confident in how to price the purchases or how to negotiate them. In those first few deals, Marsden Holding often led the process with its legal and finance teams, which it quickly learned was not a great way to build trust.
Mingo and Kruse also became more adept at recognizing the true concerns of all parties involved — from the business owner to the employees to the seller’s existing customers.
To the potential seller, confidentiality is always the first concern.
“People have to feel like they can talk to me in confidence,” says Kruse. “They have to feel that once they ask me a few questions or once they start poking around the edges of thinking about selling their company that they know that information is not going anywhere.”
Contract cleaning can be a small world, so if Marsden Holding can’t keep potential deals quiet, its credibility, and thus its business, would fall apart. A large number of these acquisition discussions never get very far anyway.
“Maybe 10 or 15 percent get past the second conversation,” says Mingo.
Marsden Holding has also made it a priority to understand the seller’s motivation. Quite often, these business owners started their companies because they enjoy sales or cleaning, or what Mingo and Kruse call the front end of the business. But as they become weighed down by administrative duties — the back end of the business — they lose their passion. Sellers are also often simply looking to reduce their enormous burdens and work fewer hours.
Whatever the reason, Marsden Holding wants to know so that it can determine if there’s a role for the seller after the sale goes through. That is, if the seller wants a role.
About 95 percent of sellers are so committed to their companies that they stay on in some capacity for about one to three years, says Mingo. After that, the number typically drops to 10 or 15 percent, as most sellers realize that their employees and customers are in good hands. The sellers also often decide they don’t want to keep up the grind. Kruse seems to be the rare exception.
The concerns of a seller’s employees can be quite different from those of a seller, but they likely aren’t all that surprising. Basically, employees want to know that nothing is changing. That can’t always be the case, but Marsden works to ensure a company’s culture stays in tact.
“There is a constant battle for probably the first year for them not thinking that another shoe is going to drop,” says Kruse.
Maintaining a company’s culture, however, isn’t often all that hard, as Mingo and Kruse recognize that the culture was likely contributing to the company’s success in the first place.
“Sometimes it’s the small things that matter the most,” says Kruse.
Employees want to know they can continue their tradition of a potluck on Thanksgiving or pizza on Fridays or a barbecue in the back parking lot during the summer. Marsden wants to keep those traditions.
“Absolutely,” says Mingo. “What time? We’re coming over.”
But, sometimes change does take place. Marsden Holding extends to the new employees its benefits program, which can on occasion be more restrictive but is often a better value. Payroll is moved to Marsden Holding’s headquarters. Marsden Holding also ensures that vacation and bonuses are given out legally and the accounting is done properly.
Although Marsden Holding makes a point of avoiding wholesale changes, the parent company does place large growth expectations on the newly acquired company. How that company meets those expectations is usually up to the local team.
Mostly, though, Marsden Holding, and specifically President and Chief Administrative Officer Sita Morantz, work to demonstrate that this new ownership isn’t coming in to blow everything up.
“Sita’s experience and talent in providing superior ‘bedside manner’ in the first few months after the acquisition is the key ingredient in a smooth and comfortable transition,” says Kruse.
Marsden Holding tries to get everyone back to business as usual as soon as possible, so that the customers can continue receiving the best service from the same faces.
That’s the biggest customer concern: Will the customer have to meet, interact with and learn to trust new people? As was the case with the top Scioto customer that had no idea Kruse had sold the business, the answer is usually no.
“They really only care about who on the ground is going to take care of them,” says Mingo. “The discussion around the holding company is a short one, generally.”
Marsden Holding is there to flex its muscle — its national reputation and financial support — should a Fortune 100 customer dismiss the local contractor out of hand. After that?
“Marsden Holding’s name fades away quickly,” says Mingo.
Just as the Marsden Method intends.
Unique Acquisition Strategy Pays Off For Contract Cleaner
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