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Sunday, 25 May 2014 22:00

Scheid helps steer Zeigler Auto Group to growth opportunities

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Dan Scheid, CFO, Zeigler Auto Group Dan Scheid, CFO, Zeigler Auto Group COURTESY PHOTO

When Dan Scheid and Aaron Zeigler took over the family-owned Zeigler Auto Group more than a decade ago, they knew they wanted to position the Kalamazoo-based dealership group for growth.

But even Scheid acknowledges that the company’s rise has exceeded their best expectations.

Since 2003, the CFO has quarterbacked more than 25 acquisitions that — combined with adding stores for new brands — have helped the company grow from six stores and sales of $180 million to more than $600 million last year at 18 locations. About 70 percent of that growth has come in the last six or seven years during an economic downturn that rocked many companies in the automotive industry, including dealerships.

“The downturn was one of the greatest things that ever happened to our business,” said Scheid, who was selected as a finalist in the MiBiz CFO of the Year Award in the corporate category.

The reason: The recession reset the dealership landscape that had long been dominated by public companies that drove up valuations and priced most smaller firms out of the market, he said. At the same time, many smaller dealerships struggled as they ran out of capital or saw red ink on the balance sheet for the first time — and many of them had not really mapped out a succession plan. As valuations eroded with the economic downturn, it afforded well-capitalized strategic buyers like Zeigler Auto Group an opportunity to grow through acquisitions — and at favorable price points.

“Valuations fell apart, and that opened the doors for us to go make acquisitions,” Scheid said, noting he’s involved in assembling the capital packages for each deal. “Frankly, our capital could go a lot farther. The road was wide open.”

In the last year alone, Zeigler Auto Group expanded to New York with the acquisition of a Honda dealership in Amherst and bought out one of the country’s largest BMW franchises in the Chicago suburb of Orland Park, Ill. The company also added new Maserati franchises and facilities in Grandville and Schaumburg, Ill.

Peter Roth, a partner at Varnum LLP who’s worked with Scheid as a general counsel and in the course of deal transactions, described him as “very high-powered and hard-charging.”

“He juggles with a lot of balls in the air and finds a way to compartmentalize what’s going on so he can do a deal and continue running dealerships or work with multiple components of the deal,” Roth said. “It’s seeing how the pieces fit together in the big picture and figuring out what to focus on. He can go 100 miles per hour, but still remembers to prioritize. And he’s reasonable when bumps come up.”

The acquisition of the Orland Park BMW franchise “was the definition of serendipity” and fulfilled a key goal for the dealer group to operate a “high-line” brand in a major metro market — part of the company’s strategic plan it outlined in 2003, Scheid said.

“Seven or eight years ago, I would have never sat here and thought we’d put together as many successful acquisitions that we’ve done,” he said. “Aaron has the vision. I’m just the quarterback that puts the deals together.”

The vision that Scheid helped execute had its foundation in the owners’ desire to grow, the available capital and resources to act on deals and the youthfulness of the management team — Scheid included — to position the company for stability in the long term.

Early on, Scheid had his hands in all areas of the finance function at the company, but he credits the team he’s assembled to handle the day-to-day financial activities with allowing him to focus on business development.

“I feel good about heading down uncharted territory for us. And … we never would have got to where we are today without the team we’ve built,” Scheid said, crediting the addition of some “dynamite” controllers in kickstarting the operations. “I have a team of operations people who free me up to work on business development activities and growing the team. Our biggest challenge right now is getting the right people in the right place. We can’t grow unless we have the right team in place.”

Another key challenge: Navigating the regulatory environment whether in structuring deals to be advantageous from a tax perspective or working with local municipalities that run the gamut from welcoming to difficult in their dealings with businesses, he said.

“The (details) in the transaction are in your control, and you can steer the outcome for the most part,” Scheid said. “A lot of (the regulatory environment) is out of your control and you’re left wracking your head to figure out how you can influence the outcome.”

 

Dan Scheid

  • Organization: Zeigler Automotive Group
  • Annual sales: $600 million
  • Transformational moment: Scheid and his team led Zeigler Auto Group in an acquisition that consolidated three outside-owned dealerships into one under the Zeigler brand in Schaumburg, Ill. in 2007. “We put together three dealers: One that did not want to combine, one that didn’t have a choice, and one that wanted to,” he said. “It was the most complex deal Chrysler had ever seen.” Scheid worked quickly to put together a capital plan for each of the three transactions, which were closed in three consecutive days — all while the company was simultaneously opening a new JD Byrider used car franchise. “That was the tipping point for us, and we learned a ton of things in that deal. It was really a catalyst for how I structure deals, it was my proof point. We had the right vision, the right leadership, and the right location. It felt good being the quarterback putting it together.”
  • Mission critical: As a family owned business that can have $140 million in inventory, Zeigler Auto Group has to pay close attention to its liquid capital, which can fluctuate 20-25 percent on a given day. “A check of the capital — even if it’s for five or 10 minutes — is how I start my day,” Scheid said. He developed a structured formula to monitor the capital needs of each of the company’s 18 locations “to make sure the most opportunistic locations have access to capital.” The other key piece is communication with the controllers and office managers on his team to ensure “I have my thumb on the pulse of the people” to anticipate when the various parts of the company will need support.
  • Academic degree: Bachelor of Business Administration, Western Michigan University; became a CPA while at Deloitte
  • Community involvement: Serves on the boards of Kalamazoo Valley Community College Foundation, MRC Industries Inc. and American Cancer Society Drive for Life
  • Personal: Married to Laura; two daughters, ages 9 and 7
Read 14665 times Last modified on Tuesday, 10 June 2014 07:46
Joe Boomgaard

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jboomgaard@mibiz.com

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