While the numbers are hard to pin down, the reality is drivers don't make much when factoring out overhead costs.
BOSTON — A legacy brand has combined with an innovative brand in the chauffeured transportation world, generating one of the most talked-about and closely watched acquisitions in the history of the industry.
The two established Boston brands — the venerable Fidelity-owned Boston Coach, founded in 1986, and the entrepreneurial Harrison Global, founded in 1982 — are consummating a major deal first reported May 22 and closed on July 8 that will result in the Boston Coach brand enduring and growing. Since May, the management team has been working overtime to integrate the two companies’ operating systems and satellite locations in the U.S. in order to streamline business and create one brand. The Harrison name will eventually disappear, as Boston Coach carries plenty of flagship clout.
One of the unique twists to this venture is the fact that the primary executives and managing partners running Boston Coach and Harrison Global day to day worked at Boston Coach before. Harrison Global CEO Russell Cooke served Boston Coach from 1986 to 2005, starting out as senior vice president of operations before leading the company as President and CEO from 1995 to 2005. Harrison Global COO Bill Gemmell worked as CFO from 1992 to 2001, a role that helped him gain expertise in every facet of the company’s operations.
Terms and structure of the sales transaction were not disclosed. But Cooke told LCT that the acquiring company, Marcou Transportation Group, owner of Harrison Global and taxi and school transportation divisions, is about equal to Boston Coach in size and scope. “This was not a minnow swallowing the whale. It was manageable from a financial standpoint, with company revenues within 10% of each other.”
Boston Coach comes with a distinguished legacy, as it sprung directly from the Fidelity Investments firm, headed by Edward “Ned” C. Johnson III. Johnson created Boston Coach in 1986 as a high-end corporate transportation service for the members of his firm. At the time, there were few sedans and limousines serving the corporate market. Over the years it grew to include many firms and corporate clients that matched the brand presence and characteristics of Fidelity.
To this day, Boston Coach is one of the most highly sought after sources of affiliated chauffeured business among limousine operators nationwide. Its awards program for affiliates confers prestige on winners while its annual affiliate meeting in Boston each July, where the awards are presented, brings together an exclusive club of high-quality chauffeured transportation companies. In many respects, to be named an affiliate of Boston Coach is to have “arrived” in the limousine industry.
“This was Ned Johnson’s baby forever,” Cooke says. “What intrigued me about Fidelity are its integrity, capital, bandwidth, and Ned’s commitment to business.”
After Cooke left Boston Coach in 2005, he followed a golden rule of networking and advancement: He made himself available as a consultant and stayed in touch with the executives. “I [expressed] to Johnson that if ever at a point in time he wanted to launch off Boston Coach, I would be very interested,” Cooke says. “I kept probing and asking questions and never let go, with great passion and perseverance.”
Eventually, Johnson decided that Fidelity should focus more on its core investments and services and shed those properties that did not fit that strategy, including Worth Magazine and Wentworth Galleries, Cooke says. Cooke and Harrison Global were a knowledgeable and natural fit to take over Boston Coach. “They made the decision they wanted to find the right team to carry the legacy and commit to keep it.”
PLATFORM TO GROW
As their strategy going forward, Cooke will focus on boosting sales and revenues while Gemmell will pursue technology and operating initiatives. Both have extensive P&L experience in multiple limousine industry companies. They want to make Boston Coach the leading chauffeured luxury provider in the industry.
Boston Coach started with $1 million in annual revenues in 1986 and grew to $16 million in 1992 and $175 million by the early 2000s. It now projects annual revenues of about $200 million.
Like many limousine companies, Boston Coach suffered after the terrorist attacks of Sept. 11, 2001 and the ensuring recession. Boston Coach recovered, but then, like other companies, took substantial hits to revenues and its fleet all over again from the financial meltdown of 2008 and Great Recession. Boston Coach reported a fleet of 671 vehicles in the August 2008 LCT 100 Largest Fleets List, just one month before the financial meltdown. The combined companies most recently reported 405 chauffeured vehicles on the 2013 LCT fleets list
“We can apply experience from the first time around and learn from mistakes,” Gemmell says. “We are optimistic about this opportunity to build a legacy.”
The timing of the sale was right, given that the economy has not fully recovered, he adds. “We are highly confident about our ability to grow an executive service. We have a ton of work in front of us, but it doesn’t feel like work. We enjoy doing what we do.”
The company plans to grow its farm-out volume. No affiliates will be fired from the program, and all contracts will be honored. Boston Coach and Harrison Global affiliates at the time of the sale are conducting business as usual. The only possible conflicts could arise where there is an affiliate for each company in a lower volume, lower-tier market, Gemmell says. “In those cases we’ll be as judicious as we can with ride distribution. There could be some sharing of rides where there wasn’t before. We want to be a good partner to affiliates on both sides of the house and pull them into one program. One of our major goals is to grow and we should work with those guys.”
An operator attending the annual Boston Coach affiliate meeting July 29-30 said providers for both companies were reassured of steady farm-out work.
“Since both networks use us, I was wondering whether I am going to gain or lose,” said Dan Goff of A. Goff Transportation, based in Charlottesville, Va. “Which will be the primary network? Bill said one thing is factual: When the companies combined, no business was lost. The networks are getting the same or greater volume pushed through them.”
Gemmell inspired confidence in affiliates by underscoring that the new team plans to take Boston Coach back to its peak revenue years, Goff says. “The Marcou brothers have multiple interests in the transportation business, and for those operators who have multiple lines of business, the opportunity to work more closely with Boston Coach on RFPs is an advantage that didn’t exist before when Boston Coach was a formal transportation company. I’m impressed by the breadth of its footprint in transportation.”
The return of Cooke and Gemmell will infuse Boston Coach with new energy, says Jonna Sabroff, President of ITS in Los Angeles, who also attended the July affiliate meeting and has been handling Boston Coach affiliate work since 1993. “They are excited about rebuilding the BostonCoach brand. They are aggressive about winning new business, partnering with the affiliates and developing new strategies for creating opportunities for the Boston Coach affiliate network.”
At the close of the deal on July 8, the Boston Coach fleet numbered 265 vehicles and Harrison Fleet was 140, for a total of 405. The company is analyzing its overall fleet makeup and distribution with a goal of growing to about 450 to 500 vehicles in the coming year, Gemmell says.
Since the primary Boston Coach fleet vehicle is Cadillac, the company will continue with the brand in the near term as it further evaluates client preferences and wider vehicle choices in the chauffeured transportation industry, Gemmell says. “The next round of vehicles will be Cadillac, but I hesitate to say it’s a permanent decision. The market is mixed and we’ll see how it develops.”
BEST OF BOSTON
Boston Coach is in a unique industry position as the owner of a full-service Destination Management Company called Best of Boston. Boston Coach acquired it in 2005 as a complementary venture that can serve conventions and meetings clients who use Boston Coach’s transportation services. Best of Boston, which generates about 5% of the company’s revenues, will remain status quo, Gemmell says.
Clients, both corporate and individual, will not notice any significant changes or disruptions, as Boston Coach will remain oriented toward an account list that is 80% Fortune 500 companies. About 30% of sales volume comes from the banking, investment and financial services sectors, with the pharmaceutical, medical, high tech, five-star hotels, and airline industries serving as other key components of the Boston Coach/Harrison Global client base. “Customer service and quality of service are our absolute priorities, as this is the value proposition we are offering our clients at an affordable price point,” Cooke says. “We will stay focused on our core competencies. . . However, we have other plans ahead to offer a ‘one-stop shop’ for a variety of service options as we move forward with our strategic plans.”
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