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Blueprint for Success: Merging Market Competitors into a Unified Force

Plante Moran’s integration expertise helped transform local competitors into a unified company

Blueprint for Success: Merging Market Competitors into a Unified Force

When New York-based Soundcore Capital Partners, a buy-and-build private equity firm, completed the acquisition of its second paving company in the Minneapolis area in 2023, the firm was tasked with integrating two rival businesses.

These competitive paving companies, ACI Asphalt & Concrete and ACS Asphalt Concrete Solutions, now had to fully merge into a new platform, which would be the cornerstone for Heartland Paving Partners. Jeff Long, a partner tasked with driving growth and performance improvement across Soundcore’s investment portfolio, has a lot of experience managing integrations, but he knew he needed to bring in more expertise on this one.

This section of the report is sponsored by Plante Moran and originally appeared in the Spring 2024 issue of Middle Market DealMaker.

Not only would it require excellent people skills to smooth over tensions between these competitive businesses, Long needed to devise a plan to integrate the two organizations and identify performance improvement initiatives to optimize the combined entity, all within a short timeframe.

Due to the highly seasonal nature of the paving industry, ACS’ deal closure in mid-January gave Long only 15 weeks to integrate the two companies and ensure their collaboration.

The off-season timing of the deal further complicated the process. Several key employees were on vacation, reducing available staff to drive the integration process forward.

Long selected Southfield, Michigan-based Plante Moran, one of the largest audit, tax, consulting and wealth management firms, to work with. “I hired Plante Moran because they are distinctive in the marketplace,” Long says. “Because of the size of the companies we work with, there aren’t many consulting firms that truly understand a buy-and-build shop like ours. Most consulting firms don’t understand the lower middle market like Plante Moran does.”

Most consulting firms don’t understand the lower middle market like Plante Moran does.

Jeff Long

Soundcore Capital Partners

Fostering Unity Among Competitors

One of the major challenges of this deal was unifying two entities that had long viewed each other as rivals. Recognizing the situation’s sensitivity coupled with the tight time constraints, Plante Moran had to dive right in to get to know the team and understand how they operate.

“We sat down with leadership to understand how things were currently done and how they wanted to do things in the future,” says Kim Doyle, partner at Plante Moran. “We worked with them to establish a new operating model for the newly created entity, identified opportunities to optimize operations, and then built a plan to get there.”

What made matters more complicated was that the companies each had a strong sales force with different and successful sales strategies. These teams needed to be unified and aligned around a common strategy, all during peak sales season.

To tackle this effectively, Plante Moran set up and managed an integration management office (IMO). The IMO met with executives and key stakeholders weekly to review progress and resolve bottlenecks. The team escalated issues to Long if bottlenecks couldn’t be resolved swiftly.

“What we had were two very competitive businesses in the same small marketplace,” Long says. “This all caused heightened tensions that required Plante Moran to have astute people management skills. It meant getting all the issues out there, objectively weighing the pros and cons, and then forging a consensus on the way forward together.

“All of this required tactful people skills, an aligned strategy and strong collaboration between all parties on the part of the Plante Moran team,” Long adds.

Establishing an Annual Operating Plan with Performance Improvement Initiatives

Another significant challenge was creating an annual operating plan (AOP) with companies that had never had one before. Identifying and executing key performance improvement initiatives that translated to EBITDA improvements for the combined entity were also critical to the deal’s success.

“These were owner-operated, founder-led companies, so many of these concepts were new,” says Doyle. “The idea of building an annual operating plan, looking at the business to assess profitability and margin, coming up with improvement plans and stretching to increase value relentlessly year-over-year was all new to them.”

The Plante Moran team collaborated with Long and used a defined Six Sigma for Services approach to identify eight key performance improvements and established a method to track those goals. They also created all the financial modeling for the initial AOP. The new leadership team of the combined entity collaborated on the effort and, as a result, took ownership over the execution of the initiatives.

One of the more challenging initiatives was the optimization of scheduling. “The trick to that was making sure the staff was dispatched from the best yard with the best crew to do a particular job,” Long says. When done correctly, it saves time and money.

Long says that initially the Plante Moran team had devised a schedule optimization tool that was too complex to follow. The Plante Moran team immediately reworked the tool based on Soundcore’s feedback. Long adds that while this might seem like a minor detail, other consultants that he had worked with hadn’t been as willing to adapt to feedback.

“You have to remember you’re dealing with real people at these companies,” Long says. “You can only do so much at a time, and Plante Moran understands that.” Long explains that “many of the companies we invest in are run by their founders, who are very confident in the way they have built their company but skeptical of alternatives. Working with a consulting firm that understands this and adapts wisely is key.”

Kim Doyle is a Partner at Plante Moran.

Jeff Long is a Partner at Soundcore Capital Partners.

Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.