MANAGEMENT
We Have an Announcement …
Wait, No We Don’t!
When & why it makes sense to communicate the sale of a propane business to customers
By Steve Abbate
Many debate whether a company should announce an acquisition to customers or try to keep it quiet. Having been involved in hundreds of transactions on both the buy and sell side myself, I have seen the results of both announcing and keeping it quiet. Well, there actually is no way to keep it totally quiet. You have to tell your employees, and your competitors will certainly know about it and will try to use the news to convince customers to sign up with them. I have even seen companies use advertising to let customers know that a competitor has been sold, usually mentioning that the sale was to a big corporation.
There are a lot of things to consider before deciding whether to announce an acquisition:
- Does the buyer operate in the area?
- Will the former owner be staying on for a transition period?
- Will there be a name change?
- Will billing, credit terms or the payment mailing address change?
- Will the name of the company remain on the vehicles?
- Will all employees remain in the same positions and with the same pay and benefits?
- Will all services, such as technician services, customer service telephone answering, service contract renewals, and delivery or service scheduling, remain the same? Will the same employees who have built relationships with customers still be servicing them?
If all these items will remain the same and the buyer does not operate in the area, there is a strong argument not to announce the transaction since the only change is ownership. That’s a much easier conversation to have with customers than having to explain the changes.
In most situations, however, I advocate for letting customers and the industry know about an acquisition so the buyer can control the message. As an example, letting people know the company will be operating from the same location with the same employees puts both customers and employees at ease. It also removes competitors’ ammunition to take your customers. Even if you meet with the employees and let them know nothing is changing, it is much more meaningful for them to see it in writing in an announcement.
Many times, a well-written letter from the seller to the customers puts customers at ease. I have even seen owners receiving congratulatory cards and emails. One customer sent a seller a gift certificate to take his family to dinner as a thank-you for the many years of great service.
One of my favorite announcements happened while I was working for a large company in the mid-Atlantic and we purchased a business in Baltimore: Aero Heating Co., owned by Harry Horney IV. The company had around 2,000 customers, and we decided to invite all the customers to attend a minor league baseball game at Ripken Stadium. They all received two free tickets, and everyone got a baseball hat.
This cost us around $15 per person in 2005 and we gave away 400 tickets. Our customers appreciated us after that, and we had the opposite of attrition as a result. We grew the company by 4% in the first year.
Some advocates for keeping things quiet have told me that letting customers know gives them a reason to shop around for a new company. My observation is that the opposite is true. Customers become disappointed if they learn their company was sold and no one told them. This is especially true if the buyer makes changes as outlined in this article.
For a buyer, an announcement to the industry lets other potential sellers — or companies representing sellers — know they are an active buyer. I know personally that if my fuel, HVAC, pest control or lawn maintenance company was sold and I was not told, I would be upset. I would likely keep the new company, but I would be on the lookout for any service that was lacking.
Most of the time, the buyer will end up making the transition experience better for the customer by offering more or better services. Customers like to hear about the positive changes, and learning about the sale from an announcement is a great way to start the conversation.
