Operations

Texas Operator Buys Company for 50/50 Market Result

LCT Staff
Posted on June 2, 2010

Houston-based American Corporate Transportation buys Black Tie Limo to diversify its client base. Charles Tenney arranged deal.

HOUSTON — AMERICAN CORPORATE TRANSPORTATION of Houston bought the assets of Black Tie Limousine, also of Houston, in a deal that was completed on May 19 for an undisclosed sum.

ACT co-owners Wes Hart, also the vice president and director of operations, and Mitch Guidry, president, now own BLACK TIE LIMOUSINE and will run both companies under their respective names, websites, and phone numbers.

ACT, founded in 2005, had four vehicles oriented toward corporate transportation, while Black Tie, founded in 2002, had eight vehicles that served mostly retail markets. The combined companies will operate a fleet of 11 vehicles, consisting of five sedans, five stretch limousines, and one SUV. ACT and Black Tie can tap affiliates for vans and mini-buses. The companies have 16 full- and part-time employees. Estimated annual revenues were not disclosed.

“Until now we focused more on corporate transportation, but adding Black Tie to our family will bring more diverse opportunities to our company,” Hart said.

ACT and Black Tie operate predominantly within a 75-mile radius that includes the Houston metro region. The clientele for the new venture will split about 50/50 between corporate and retail.

Charles Tenney of CHARLES TENNEY AND ASSOCIATES, a ground transportation brokerage based near Dallas, said the deal was one of the fastest and cleanest his firm has handled. The deal closed May 19, 57 days after Black Tie was listed for sale. His fastest deal took 32 days, Tenney said, while most deals take three to nine months to close.

The deal had nothing to do with the recession and was driven strictly by personal and family issues on the part of Black Tie’s former owners, brothers Shane and Shawn Kogan, Tenney said. “This was really a win-win situation. This transaction dispels the myth that selling the business results in someone getting a big deal, better hand, or getting something over on someone else.”

The deal came about after the Kogan brothers listed the company for sale with Tenney, who then told Joe Jordan, president of the Houston Limousine Association, that one of his members was interested in selling. Tenney and Jordan prepared a blind executive summary that was circulated among the members, which then yielded buyer interest from Hart and Guidry of ACT.

The Kogan brothers wanted more time to devote to their other full-time corporate careers, and needed to be freed from the demands of Black Tie, Tenney said, while the owners of ACT saw the purchase as a way to achieve life balance.

“The buyers had specific goals for this transaction,” Tenney said. “They wanted to diversify their revenue stream and provide security for the future and deal with events and crises. [They wanted to] grow their business to a size that would enable them to have an infrastructure and improve their lifestyle by allowing them to have some nights off and weekends off and vacations, instead of working every day, week, and night.”

The sales process involved getting the buyers to fully understand the value of the company for sale, so they understood why they should pay the asking price, Tenney said. “The price was within market analysis we provided for the seller. We negotiated back and forth, getting the buyer to understand the value of the business in terms of what it could do for them.

“Most sellers in this country have no idea what the value of their business is. Most buyers don’t either,” said Tenney, a former operator and NLA president who has been brokering limousine company deals for about three decades. “You might have something more valuable than you think it is. Most sellers think business is worth more than it is; most buyers think businesses are worth less than they are.”

Source: Martin Romjue, LCT Magazine

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