Musings on Standard’s Purchase of Central

I have been chatting with the usual suspects about this purchase.  Here are some of the comments:

…you know another side you may want to consider is that Central started to have troubles after they acquired Allright. These acquisitions are never easy, with two large firms like this there is duplication of effort and peoples jobs descriptions have to change and that does not always set well. I wish them the best of luck if it goes through but something is going to smart, it always does. If done right they both should benefit, time will tell.

…It really does lessen the competition for clients who have a significant amount of parking and need an operator.  We have already had difficulty getting reasonable competitors for our clients, and so have other folks.  Airports in particular will be at a disadvantage now, I would think. I do think it will hasten the pendulum swing in the other direction — the establishment of new and smaller operators who will focus on quality, stability of managers, etc.  This combination will throw out a number of folks who will start their own firms, go to smaller firms, or go elsewhere in the industry.  There is no way that everyone from Central will be accommodated in the new organization.  And of course it may give Standard’s management the opportunity to eliminate some employees that they may have wanted to before.

…the original purpose of purchasing Central, which was primarily a real estate play, couldn’t work with the economy in the shape it has been.  Unlucky for the group (Kohlberg et al)  that they bought Central just when the bottom began falling out of commercial real estate development.

…Clients will need to begin to think about the real effect of their qualifications for running their parking.  Phrases like “experience with 5,000 spaces in one location”, “experience with # other airports”, and the like will really begin to be difficult as qualifications.  And some of the smaller firms are going to have to get ready to gear up and make a case that they can do some of the big jobs.

…The effect on small local operators like us is yet to be seen since all parking is local. What has been helpful to smaller companies is the technology that has become available (I am referring to accounting systems, payment methodologies, and the like) that “assures” the client that revenue control and lower operating expenses are not only the province of the large operators. You don’t need to be a big company to benefit from bundled services and competitive pricing from signs to credit card processing fees but you must educate your client and potential client because the “big gun” that the big companies use is bigger is better. Maybe if you are Wal-Mart but there is another side to that argument as well.

…The fear of the larger and larger companies, coupled with the economy, has made the smaller companies look inward and perhaps do things quicker than in the past and that is a good thing resulting in more streamlined and cost effective operations. The other point is that with local ownership and long term co-workers (in other words I am never going to be transferred to Cleveland because we have no Cleveland) there is the comfort of knowing that I am there for you because I always have been. I grew up going to Walsh’s Drug Store: my grandfather knew Joe Walsh, my dad knew Joe Walsh and I knew Mr. Walsh and Joe Walsh’s medicine was just as good as Walgreens except they didn’t have Mr. Walsh. Maybe I am at bit melancholy in my old age but I think there will always be a need for Joe Walsh.

…It surely will hurt competition, but regional competitors can easily form and compete on largely labor contracts.  I don’t think it will have an impact on pricing except possibly in large-scale areas like Airport operations.  Standard’s pricing will have to go up.  They can’t justify market share pricing any more, and their creditor will insist on significant gains in free cash flow.  My guess is that we will not hear much of interest from this deal for three years.  They will be so inward focused finding $20M in labor savings, rationalizing systems and structure, etc.

… If you and I are interpreting correctly, it’s a classic textbook case of the rise and fall of an American firm. From a small parking firm family run in the 70’s and 80’s, to the largest operator in north America  and possibly the world, as they were successful in the EU and Asia with Monroe at the helm and now this. Sometimes you get so big you lose how to control it and what your good at. As soon as they hired that guy James Marcum)  from Circuit City as CEO, we knew he was getting it ready for sale. When he systematically let the guys with big pay checks go, we all thought it would happen last year…this was inevitable.

That’s a pretty good cross section of what I have heard in the last six hours.  There will be a lot of talented parking managers, middle and senior managers, on the street in the next few months as the consolidation moves forward.  They will have relationships with customers and if they want to stay in the business, they could form new companies, or join smaller regional firms and take those customers with them.  The 4400 could become 3400 quickly.

New technology has made starting a parking venture relatively easy, and inexpensive. New companies will spring up quickly and become formidable competition. Customers will be forced to rethink their requirements (company size, location, and the like) when they go out to bid and that will allow smaller companies an opportunity to bid.

One of the wags above noted that parking is local. A consolidation like this signals to owners that there are no guarantees, that just because one is large, it doesn’t guarantee that it is going to be around in its same configuration. Smaller, personalized, boutique operators will find their marketing task easier in a “David vs Goliath” world.

I have spoken to senior Central managers who are concerned that they have no voice in a court located in Chicago. Who will survive in cities where both companies have a similar number of locations and infrastructure? It will take all Standard’s wisdom to make the right choices.

The justice department will also have a say in how many locations Standard can keep in some markets and how many it must divest. Surely those will be available to help strengthen regional players.

At least the Central remnants now have a group of parking folks at the helm. We all know what happens when non-parking managers try to lead a parking company. It is a debacle. Witness Allright and even Central two or three times in the past. Plus remember Macquarie and its purchase of NCP in the UK.

We live in interesting times…more later as this evolves.




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One Response to Musings on Standard’s Purchase of Central

  1. Manny Rasores de Toro says:

    Time will tell if this acquisition / merger proves to be something good for the market or a complete disaster. On paper, if management focus too much in delivering the stated operational savings of $20M, I think the merger will straggle and encounter all sort of problems along the way.
    I believe the businesses should concentrate in using the enhanced joint resources and freedom of not been constrained by a venture capital owner to invest in technology and deliver a high quality and enhanced services to their patrons (much along the lines of Q-Park in Europe).
    How well the businesses are integrated and all involved feel valued and wanted will be the key for success or failure.

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