Guest Blog Post written by Joe Alonzo
About Joe Alonzo
Joe was a partner and founder of RG Rents, a three-location equipment rental business in St. Louis, Missouri. RG Rents was sold to Sunbelt Rentals in May. Joe was also a partner in Midwest Aerials & Equipment, a four-location rental business acquired by Volvo Rents in 2011. Both RG Rents and Midwest Aerials & Equipment ran on InTempo Enterprise heavy equipment rental software.
Many rental company owners intend to eventually sell their businesses. Of course, many factors go into these decisions, such as timeline considerations. For RG Rents, our long-term plan was to sell the business in five to seven years from the time we started it. But business has been good—my partners and I had a combination of a strong economy and extensive industry experience working in our favor. We ended up reaching our goal in two and a half years. Once we hit that point, the question became whether to invest more in our equipment rental business or go out and see if anyone might be interested in acquiring the company. We decided to put out feelers and see what the interest was and ended up pursuing the opportunity with Sunbelt. Here are several things we learned along the way:
A key factor in preparing your equipment rental business for an acquisition is organization. Being transparent and staying extremely organized is key. Since we have been through the acquisition process before, we knew how crucial it was to be transparent and have the information at our fingertips. Aside from the obvious importance of keeping your financials organized, another benefit is that comprehensive record-keeping builds confidence on the part of prospective buyers and lenders.
All of our employees have stayed on board following the acquisition. The experienced buyers in our industry realize they can get rental equipment anywhere; it’s the people in all of these different markets that drive their business and make it successful. It wouldn’t make sense for them to buy our business without keeping our biggest ‘assets’ - our people. This acquisition gave our employees new opportunities to advance in their careers and get professional training. There’s also more equipment to rent out, so there’s more opportunity for our salespeople to generate additional income.
When you go from being a small rental company to becoming a part of a larger one with many locations, there’s more risk and liability involved. You really have to make sure that operations are buttoned up and in order. For example, there’s more attention paid to safety. Now we have a team that can help us with that directly, and there are more safety trainings for both our employees and customers. You also have HR involved in your business. The decisions you make have to be in line with the hundreds of other stores you may have, so decision-making is slowed down a little when you are acquired by a larger rental company. But you also have more help. When you’re a smaller company, reaching out to somebody in your industry who is not a competitor can be really tough. But today, I can reach out to the Chicago area group within Sunbelt and sit with a person that’s in my same position and pick their brain. We can bounce ideas off each other. That’s a major benefit of being part of a larger rental organization.
The InTempo Enterprise rental ERP is the same as the RentalMan system used at Sunbelt. (InTempo and RentalMan’s Wynne Systems are both owned by Constellation Software.) For us to be on Enterprise was a huge advantage during the acquisition process because it is the "gold standard" for software in the rental industry. When a buyer comes in that already uses the same system, they know how to go in and get all the information they need. It puts the buyer at ease and also makes the transition smoother. There’s no learning curve for us to move right into an unfamiliar system. Our employees don’t need to learn brand new rental software or workflows.
If you are preparing for an acquisition, I’ve found that staying highly organized and having the right people and systems in place can help put your best foot forward with buyers. It can also save you from wasted time and unnecessary aggravation. But no matter your future plans, these are sound practices, in general, to follow when building a successful business.