After building a purpose-driven retail business that had experienced more than 100 percent YOY growth for four straight years, CEO Steve Hall knew driversselect was poised to scale. But the business model had outpaced his abilities to scale it without taking on serious financial and cultural risks. For one thing, driversselect was in desperate need of a much larger facility. Tribe members (driversselect employees) were on top of each other at the existing location, and inventory was being parked at an overflow lot several miles away due to lack of space. The growing pains were palpable.
Steve, winner of the Satori Conscious Capital Markets Award, knew that the stress of staying in a facility that was too small and didn’t contain all the resources required to thrive was going to take a toll on his people. He and his tribe were passionate about making a great impact through adhering to their purpose, but without scaling properly, the culture could be diluted. This, in turn, would lessen that impact and weaken the passion that had driven the success of the business to this point.
Every CEO will deal with this issue at some point over the course of their careers and/or lifetime,Sunny Vanderbeck
Advises Sunny Vanderbeck, cofounder of Satori Capital and author of the forthcoming book, Selling Without Selling Out: How to Sell Your Business Without Selling Your Soul. “The decision is the most impactful one a CEO will make… and it is completely irrevocable,” he warns.
Could driversselect scale without destroying its culture—one that had earned the used car dealership numerous “Best Places to Work” awards and had created a well-oiled machine that was now one of the top-performing, single-point used car dealerships in the country? Was there a strategic partner who would facilitate the growth at a sustainable rate and who would be as good a steward of driversselect’s culture and purpose as he was?
Turns out, there was one.
Sonic Automotive, a Fortune 500 company based out of Charlotte, NC, and the fifth largest automotive retailer in the United States, came to Steve to explore a relationship that in the corporate world today would quickly turn to talks of financial terms and deal-structuring. But Steve wasn’t interested in this “wedding” planning just yet. He asked them to dig in with him and start looking beyond the wedding day to how this relationship could develop into a solid marriage—one that would create value for not only these two but also for driversselect’s stakeholders, which had been clearly defined as part of Steve’s Conscious Capitalism journey.
Vanderbeck, who Steve consulted for this “marriage” exploration, states that “Every conscious CEO has certain core values that are most expressed in their lives and organizations. They don’t disappear after a merger/acquisition, and they will never be more important than when being used to guide a decision of this magnitude in a very short amount of time.” The stakeholder impact, and what the relationship would look like—first, months, and then years into the marriage—was of utmost importance to Steve. Sonic knew that there was something special about what driversselect was doing, and the company obliged in entering a thorough vetting period where stakeholder impact and outcomes would be carefully planned out.
The “test drive”
First and foremost, how would Sonic create more value for the driversselect tribe? Horror stories abound regarding acquisitions that result in lost benefits and layoffs or squashing a healthy culture until the resulting organization looks nothing like what it did prior to the relationship. Steve knew that he could “only grow an organization as much as [he] could grow [his] people.” If Sonic wanted driversselect at its high-performing best, they would have to provide the safety, security, and meaning that gave the company record-low turnover rates and exceptionally high revenue per employee for the industry. Every potential fear that an employee could have at the mention of an “acquisition” had to be addressed with equal or better value creation than existed in the current version of driversselect.
Sonic offered up extensive benefits, expanded technology and training, and promised resources that would grow driversselect into a national brand. They also offered new career opportunities that could not be matched if Steve were to go it alone. No stone was left unturned, as they compared everything from health plans to PTO in order to make sure the driversselect tribe would have the conditions needed to continue to thrive. And, yes, Sonic could put the tribe in a new facility within months—a need that couldn’t be met soon enough.
As for additional consumer benefits, Sonic would offer access to more inventory and best-in-industry technology that would make it simpler and quicker for customers to purchase. The new facility would provide the space needed to hire more talent in order to meet ever-growing consumer demand.
The company’s vendors, consultants, and suppliers would all benefit as driversselect scaled— creating opportunities for business growth not only with driversselect but potentially with other brands and business units within the Sonic organization.
As Sonic went through this journey with Steve, they gained appreciation for how creating stakeholder value would further strengthen the business. Six weeks before closing the deal, they sent 15 top executives to spend three days at the dealership immersed in the driversselect culture. The executives came to understand the meaning and impact that driversselect’s purpose of “infecting the workplace with contagious care” held.
The big day
“Normally, a closing (wedding day) would come with many mixed emotions, including excitement, doubt, as well as uncertainty about the future,” Steve said. “But having spent so much time up front making sure we were aligned around things like mission, purpose, values, and stakeholder orientation, I felt confident we made the right decision in what was in the best interest of our stakeholders.”
In the first few weeks after the wedding, he continued getting to know them. “Not what they are in the work environment, but who they are outside of the business,” Steve said. He took time to bond with them through events and activities outside the workplace.
Nine months into this marriage have proven that the investments made in the relationship leading up to the actual acquisition are producing returns in spades. The two are now completing a merger of driversselect and EchoPark, Sonic’s flagship used car brand. This merger places the solid business model, enviable culture, and purpose-driven values of driversselect into the name and brand of EchoPark, which already has stores in Colorado and Texas. The result is that driversselect’s commitment to Conscious Capitalism is now impacting thousands across multiple states instead of just a couple hundred in Dallas. Ten people from Sonic/EchoPark attended the 2018 Conscious Capitalism Conference in Dallas and went back to their respective locations energized and committed to their own personal consciousness journey. Several executives are now flying in to participate in the Stagen Integral Leadership Program, from which Steve and the driversselect leadership team have all graduated.
Opportunities have already opened up for many driversselect tribe members, landing them in new positions that elevate their careers and leadership. And to the frenzied excitement of driversselect’s 200 tribe members, the company moved into a beautifully remodeled 20-plus-acre campus on July 2. It was an emotional experience that had them snapping photos and posting them to social media with fervor on move-in day.
With the wedding behind him, Steve muses about the acquisition, its abundance of beneficial outcomes, and the change it has brought about in his organization. He hopes that other Conscious Businesses can learn from his experience and process. “There is a field of early-stage to mid-market companies within the Conscious Capitalism community that have the abilities to scale. They face the same heavy dilemma of achieving this without being eaten alive by a merger/acquisition.”
He expresses gratitude to his team in Dallas, through all the changes of the last 10 months. “They’ve faced an acquisition, a merger, a name change, and much more, all while achieving record results for the company.” But it has only strengthened the culture. They not only put another Dallas Business Journal “Best Place to Work” plaque on the wall but were just named to Dallas Morning News’s “Top 100 Places to Work” for the first time as well.
“Nearly a year later, and having gone through many changes, I remain highly optimistic about the future,” he said.
Here are a few important items to have in place before and during a merger/acquisition:
- Have your company’s purpose articulated and solidified in the culture of your employees and of all stakeholders.
- Identify your key stakeholders, and strengthen those relationships. Make sure they know their importance as stakeholders in your organization, as they can be a resource when there is a transparent flow of information between the two of you.
- Explore all of your stakeholder relationships and how the merger/acquisition will affect those relationships. Look for the wins.
- Extend the invitation to the acquiring company’s executives to spend time within your culture and with your stakeholders.
- Likewise, accept invitations to get to know these executives on a personal level.
For an even deeper dive into the world of conscious mergers and acquisitions, be on the lookout for Sunny Vanderbeck’s book, Selling Without Selling Out: How to Sell Your Business Without Selling Your Soul, which will hit shelves in early 2019.
Authentic. Creative. Innovative. Passionate. These are a few of the words used to describe Brandi by her colleagues, peers and friends. Brandi has 20 years experience cultivating relationships in business development, brand strategy, brand and community engagement, employee engagement, client relations, social/digital marketing and non-profit fundraising.
Brandi has worked directly with one of the most innovative restaurant entrepreneurs in the industry, with one of the world’s largest and most respected media companies and has spent the last 4 years as Chief Experience Officer and Marketing Manager for driversselect, a pioneer in the Conscious Capitalism movement under the phenomenal leadership of founder Steve Hall. driversselect is one of the largest single-point auto dealerships in the country.
Brandi is a founding and current board member of the Dallas Chapter of Conscious Capitalism.