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Fox Motors’ team, from left to right: Susan Howe, vice president of finance; Monica Sekulich, senior vice president and general counsel; Jerry Moore, division director–Fox Motors West Michigan; Diane Maher, president/COO. Fox Motors’ team, from left to right: Susan Howe, vice president of finance; Monica Sekulich, senior vice president and general counsel; Jerry Moore, division director–Fox Motors West Michigan; Diane Maher, president/COO. MIBIZ PHOTO: KATY BATDORFF

M&A Awards: Fox Motors navigates complexities to acquire, consolidate pair of family-owned dealerships

BY Sunday, October 13, 2019 07:53pm

When Fox Motors negotiates deals to buy other dealerships, the Grand Rapids-based company prioritizes treating sellers fairly in the transactions. 

WINNER:

Fox Motors

Top executive: Dan DeVos, chairman and CEO of parent company DP Fox Ventures LLC

Annual sales: $976.5 million in group revenue for 2018

Full-time West Michigan employees: 1,625

Brief business description: Dealership group with a portfolio of 41 automotive and powersports brands at 36 locations across all of Michigan and in Illinois. 

Advisers: In-house counsel

That ethos handed down by founder Dan DeVos has led to continued growth for the dealership group, which generated $976.5 million in revenue for 2018 and now includes 36 stores in Michigan and Illinois. 

“My marching orders are if the buyer and seller do not walk away feeling good about the deal at the end, then I have not done my job,” said Fox Motors President and COO Diane Maher, who has handled all of the dealership group’s transactions since the company’s founding in 1999. 

“The expectations are that it’s a positive thing for both parties or it shouldn’t be done,” she said. 

The company’s reputation and dealmaking philosophy also has translated into repeat business with sellers. That was the case recently with Hank Makarewicz, who initially sold the Shawmut Hills Sales Inc. motorcycle dealership to Fox Motors in 2009. 

Makarewicz returned to the company with another opportunity in late 2018, when he proposed a two-part deal for K&M Dodge Ram, which his family owned with the Koning family, and Van Andel & Flikkema Chrysler Jeep, owned by John Flikkema III. 

The two dealerships, both of which sell brands from Fiat Chrysler Automobiles (FCA), are located a mile apart along Plainfield Avenue on the northeast side of Grand Rapids. 

“Because Chrysler has always wanted to put those franchises together under one roof, he thought that it could be attractive to a group like ours to embark on doing that and putting it all together,” Maher said. 

The proposal shifted into high gear when Flikkema jumped on board and agreed to sell his dealership simultaneously. That’s also when the complexity of the deal ratcheted up for the team at Fox Motors.

“Dealing with two sellers with two different buys-sells and the manufacturer and having that all work out and be able to negotiate something that makes everybody happy was definitely a difficult thing to embark upon,” Maher said. “It could have fallen apart with one or the other at any time, or not gotten approved by Chrysler. It’s definitely an accomplishment to make all that happen.”

The deal, which won the retail category in the 2019 MiBiz M&A Deals of the Year Awards, also included K&M’s Motor Mile Used Car operation and the Flikkema family’s Venom Motorsports Inc., a performance upgrade, off road, and street shop, as well as three properties along the Plainfield corridor. 

On top of all the business issues in the deal, each of the sellers involved multi-decade family-run companies, which bring about their own unique set of dynamics, Maher said. 

“There was some emotion in this one, for sure,” she said of the deal. “Both parties had owned those businesses for a long time and grown them and were very proud of them, and they all had kids in the business.”

With those factors in play, Fox Motors relied on its best practices learned from dozens of other acquisitions to navigate the complex business and personal issues involved in the deals. 

“You just have to approach it with kindness, try not to push too hard on certain things and just be respectful that it’s difficult sometimes for them to let go,” Maher said. “You have to give them assurance that you are going to treat their investment with respect and their people with respect and you’re going to do your best to improve it and not hurt it.”

Once the documents were signed and the deal received the needed blessing from FCA, Fox Motors then needed to get to work integrating the two teams into its systems and culture since the deal added 150 people to the company’s head count. 

As well, Fox Motors also began implementing a plan to consolidate new car operations at the Van Andel & Flikkema site and used car sales at the former K&M location, while also moving the Venom Motorsports division to the former Motor Mile location. Construction and renovation projects are expected to begin in 2020. 

Maher praised the leadership of the two former owners, the strong family cultures at their companies, and their committed employees for making the process go as seamlessly as possible. 

“Knowing John and Hank, I knew they had similar business philosophies. They are kind men who are doing the right thing for the right reasons. But you never really know until you get into something whether it’s real or if it’s going to work out all right,” Maher said. “Only could this happen in Grand Rapids, Michigan, where three parties are completely reasonable about what they want and how they see the end game being a benefit to everyone and are willing to be reasonable all along the way to get it done.”

FINALIST:  Betten Baker acquires Kent City Ford, relocates franchise to Coopersville center

The growing Betten Baker Auto Group leveraged an August 2018 deal for the Kent City Ford franchise to further expand its retail operations in Coopersville. 

Muskegon-based Betten Baker acquired Kent City Ford to relocate the franchise to Coopersville and complement its recently opened Chrysler Dodge Jeep Ram store. Along with the company’s legacy Chevrolet Buick store, it now offers seven domestic brands from the Coopersville super center. 

Between the new Chrysler Dodge Jeep Ram and Ford stores, Betten Baker expected to create more than 100 new jobs in Coopersville. 

The deal was the finalist in the retail category of the 2019 MiBiz M&A Deals of the Year Awards. 

“We are so excited for this next chapter in Betten Baker history,” co-owner Chris Baker said in a statement about the deal to relocate the Kent City Ford franchise. “This is one of the biggest expansions we have done at Betten Baker, something that will not only change our company but the way people shop for decades to come.”

As well, Betten Baker cracked into the Automotive News top 150 dealerships list this year with a ranking of 130th as measured by new car sales volume. The company operates 19 dealerships and generated $504.8 million in revenue in 2018.

The company also was an active acquirer of late, in 2018 picking up Midland-based McArdle Buick GMC Cadillac, Cadillac-based Godfrey Chevrolet Buick, Alma Chevrolet Buick and Ithaca Chevrolet, and acquiring South Haven Chevrolet Buick GMC in January 2019.

Read 2566 times Last modified on Monday, 14 October 2019 09:12
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