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Considering a Merger? Read this:

Over at Power 2 Go, Keith Jones expresses concern that mergers and acquisitions and the influx of venture capital money into the parking operations world may affect the way operators see their customers. His concern is that once VC money arrives, a company’s concern may move from customer service to focusing solely on the bottom line. He has a point.

Naturally, being an operator, his concern deals with operators and operations. I would take it a step further.

A friend who runs a parking department in a million plus population city has expressed concern about VC money entering the supplier marketplace. She has had firsthand experience with companies losing their customer centric mojo when acquired or have had a major influx of capital. In one case, she has had to replace expensive equipment due to lack of attentiveness after a buyout.

Obviously this doesn’t happen in every case. However it is typical in acquisitions that the acquired company’s founder doesn’t remain but is gone after a few months. His or her focus on the product and the customer can be lost when it is blended into a new environment. Acquiring companies need to ensure that this doesn’t happen.

Its difficult, however, when fund managers sit on your board, and are often the majority. They are looking out for their stockholders, and rightly so. They are expecting the bottom line numbers to reach agreed goals. It’s only natural that in this situation a company’s management will focus on that bottom line at the cost of everything else. The thinking becomes very short term.

Keith feels that all the M and A and VC activity may be a tad early in the parking industry’s development. He says:

Personally, I feel the whole thing is ten years too early. Another decade would provide an operational cushion, of sorts, to manage the heavy pressure of the purchased companies to hit SoftBank’s (a VC that turned a parking startup into a Unicorn) goals and KPIs while progressing undeterred toward better—and beneficial—customer experiences.

Like Keith, I’m not opposed to VC or acquisitions, however companies need to be aware of the pressures that they will receive when new management, often with conflicting goals, is in place.

JVH

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