Operations

Companies Jockey For Stronger Financial Position

Tom Halligan
Posted on March 22, 2017

A slew of company mergers and acquisitions during the last few years underscore how the industry is responding to disruptive competitive forces such as transportation network companies (TNCs). Operators also see opportunities to expand their geographic market share, fill a void in their corporate and retail business, diversify their fleets to capture new business, and also offer new services, such as private and public shuttles and full-scale event transportation.

Buying, selling, and merging companies have become a staple of entrepreneurial life in the chauffeured transportation industry for many reasons. Larger operations are looking to grow domestically and globally to expand market share and compete with on-demand service. Furthermore, smaller retail-focused operations are struggling to make a buck and are looking to merge or be bought out.

Traditional limousine companies that run sedans and stretches are expanding into minibus and motorcoach transportation to start new service channels and revenue streams to offset any revenue losses from TNCs.

As the industry changes, it will continue to respond to disruptive forces and economic swings, but as the below examples highlight, entrepreneurial operators can find new ways to grow and prosper organically or through strategic acquisitions or partnerships.

The Flyte Tyme management team at its new state-of-the-art facility in Mahwah, N. J. (L-R): Michael Rose, vice president and general manager; Tim Rose, CEO, Paul Murray; chief information officer Maria Amorosso, VP/business development; Doreen Rose, VP/finance; Ray Gallagher, VP/sales and marketing. (LCT photo)
The Flyte Tyme management team at its new state-of-the-art facility in Mahwah, N. J. (L-R): Michael Rose, vice president and general manager; Tim Rose, CEO, Paul Murray; chief information officer Maria Amorosso, VP/business development; Doreen Rose, VP/finance; Ray Gallagher, VP/sales and marketing. (LCT photo)
Across The Pond
Take for example some recent M&E activity. On the global front, London-based Addison Lee purchased Mahwah-N.J.-based Flyte Tyme to expand its North American presence. Flyte Tyme, ranked No. 5 on the 2016 LCT annual 50 Largest Fleets List, immediately gives Addison Lee a strong foothold in the New York City metro area, as well as a nationwide affiliate network.

“After 30 years we have reached the pinnacle of success and it will be fun to be part of a bigger company and more opportunities in the future,” says Flyte Tyme CEO Tim Rose, who will serve as CEO of Addison Lee North America. Considering Flyte Tyme aggressively doubled its size in five years, the acquisition not only gives Addison Lee solid footing in the U.S, but a well-recognized U.S. company already positioned to expand its business and market share.

How did the Jan. 2, 2017 deal unfold? Rose explains Addison Lee entered the New York market a few years ago to establish a U.S. presence and discovered that Flyte Tyme was a dominate player in the region. “We started to do affiliate work with them and as they learned more and more about our company, they sought us out to purchase.”

The merger of Above All’s vans, buses, and shuttles with Boston Car’s sedans and SUV fleet provides a full portfolio of diverse luxury transportation. (L to R): Stephen Ward, COO, President Kevin Cronin, and CEO Brett Barenholtz (LCT photo)
The merger of Above All’s vans, buses, and shuttles with Boston Car’s sedans and SUV fleet provides a full portfolio of diverse luxury transportation. (L to R): Stephen Ward, COO, President Kevin Cronin, and CEO Brett Barenholtz (LCT photo)
Baked Beans
Conversations between Boston operators Brett Barenholtz, owner of Boston Car Services, and Kevin Cronin, owner of Above All Transportation, turned into a merger in June 2015, when both veteran operators realized by working together they could create a robust full-service ground transportation company.

Each operator brought expertise to the table. Barenholtz was strong in the traditional sedan business and focused on sales, marketing, and affiliate relations. Cronin, who once worked as a bus mechanic, had expertise in the bus business, maintenance, and operations. Together, they realized their combined knowledge could expand the new company into a full-service ground transportation operation serving New England. As strong companies, the two formed one parent company but still maintain separate brands.

Texas Two Step
In the case of the Dec. 30, 2016 merger between Houston-based companies Avanti Transportation and A Ambassador Transportation, economic realities brought the two companies together.

With the combination of competitive pressure from TNCs and low oil prices reducing energy sector revenues resulting in less chauffeured transportation, Avanti owner and founder Erich Reindl decided a bigger, more diversified company would be a competitive advantage.

Such diversity is a main motivator for operators who see opportunity in M&As. Avanti’s book includes longstanding corporate business and contracts, affiliate work, and cargo airline contracts that span oil and gas, financial, entertainment, and hotel/hospitality industries. A Ambassador brings to the merger a school bus division, airline-related route contracts, as well as business with the oil and gas industry in New Orleans and Lafayette, La.

“A larger company can be more competitive by attracting more business and streamlining overhead,” Reindl told LCT when the merger was announced. “You have many more resources available. The efficiencies of one office can have savings in maintenance, personnel, and all other areas.”

M&V President and CEO Mark Vigilante takes a “think outside of the box” approach to growing his business (LCT photo)
M&V President and CEO Mark Vigilante takes a “think outside of the box” approach to growing his business (LCT photo)
Start Spreading the News
In business for 24 years in the rough and tumble highly competitive New York region, Long Island-based M&V Limousines acquired two companies at the same time in November 2016 to strengthen its core retail business and launch a new shuttle/commuter bus service.

M&V President and CEO Mark Vigliante takes a “think outside of the box” approach to not only adapting to economic and competitive challenges over the years, but is always looking for new opportunities.

Vigliante acquired Classic Coach, which was in bankruptcy, and also Hampton Luxury Liner that Classic purchased in 2011 but had mothballed. Hampton ran as a bus line serving New York City and the Hamptons in Long Island, mostly during the summer months carrying residents and tourists back and forth to the tony beach resort towns.

Meanwhile, Vigliante snapped up Lancelot Limos to bolster his budding special occasion and tour business. The deal added an array of classic vehicles to his fleet, including antique cars, two party buses, a Bentley, and two stretch limos.

Vigliante said he plans to re-launch the Hampton commuter line in the spring offering a mix of luxury and affordability between New York and the Hamptons for summer commuters. In the off-season, he plans to repurpose the line for Long Island commuters who would rather take a luxury bus instead of drive the notoriously congested Long Island Expressway. Also important when looking to acquire or merge with another company is making sure you do your homework on the company’s intellectual property.

“When we bought the Hampton Liner we also have access to a 300,000 customer database that used the service in the past,” Vigliante adds. “We can now market to those names and re-introduce the service. Same thing with Classic Coach that has a database of 10,000 clients over the years.”

“Look, it costs 50 bucks to park in the city plus the aggravation of driving and the cost of the Long Island Railway is $30 and there’s always track work,” Vigliante says. “I can roll out a commuter service for $19 each way, or memberships and fill six buses a day. In fact, Nassau County officials want to talk to me because they see me as a way to reduce traffic. Think about it; my bus service replaces 30 cars on the road and is better for the environment.”

Jumping from a 50- to 70-vehicle fleet with the acquisitions, M&V specializes in the wedding and nights out business and also provides tours. “We recently booked a bus tour to Texas for a week and now we were invited to operate a desk in a Manhattan wedding salon where we can meet with clients by appointment.”

Related Topics: Addison Lee, business deals, business growth, Flyte Tyme, industry trends, mergers & acquisitions

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