For Steve Knappenberger, selling his dealerships to UnitedAuto Inc. was an entrance - not an exit - strategy.
In his early 40s at the time of the sale in October 1996, Knappen-berger says the divestiture opened the door to bigger and better things, both for him and for the 450 employees at his six Arizona dealerships.
'I thought the package was quite attractive and would enable me to go to the next chapter in my career - one of greater scale,' Knappenberger says.
UnitedAuto was one of three suitors that knocked on his door. He declines to name the others or their terms, but he says all three deals were contingent upon him signing a long-term agreement to stay on and manage the dealerships.
'I really wasn't trying to sell the business,' Knappenberger says. 'Business was strong and it was getting stronger, but they made me an offer I couldn't refuse.'
ROOM TO GROW
For Knappenberger, the deal meant the best of both worlds: He no longer would have to worry about debt and personal guarantees tied to the six profitable dealerships, and he could keep doing the same job - only this time with more resources and room to grow.
'I now have a greater sense of financial security,' he says. 'I'm still doing what I love to do, but on a much larger level than I'd be able to do on my own.'
Knappenberger says it was not an 'If you can't beat 'em, join 'em strategy.' It was just that 1996 was a good year to be selling a profitable, growing car dealership company. The deal with UnitedAuto offered substantial advancement opportunities to him and his employees.
'I wasn't fearful of the public companies per se, but I do think that windows of opportunity come and go,' he says.
For instance, Knappenberger says Lexus allows a franchisee to own and operate just three dealerships. One of his locations handles Lexus, and if he had waited too long to sign on with UnitedAuto, that franchise agreement could have been off-limits to the New York company, which was on an acquisition spree. As of early January, UnitedAuto had 66 dealerships with 103 franchise agreements.
Although the divestiture was a relative no-brainer for Knappenberger, his employees initially found the sale somewhat startling.
'I think they initially were surprised,' he says. 'But when I made the commitment to stay on with the company, I think that was a telling sign for them.
Knappenberger says that after he outlined the benefits of the sale, the employees backed it enthusiastically. It was a matter of understanding what it all meant and trusting that UnitedAuto officials would stick by their promises to expand the dealerships and allow them to operate autonomously, which they have, he says.
'We had assembled a great group of employees here. They were largely responsible for our success, and I didn't want to see that threatened,' he says.
Windows of opportunity are opening up all over the company for employees, says Knappenberger, noting that several managers advanced the past two years who otherwise may not have had the opportunity. In addition, UnitedAuto managers have stock options, and in 1999, employees will be allowed to participate in the company's new profit-sharing program, he says.