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Tristar Worldwide Chauffeur Services last week acquired
Massachusetts-based M7 Worldwide Transportation for an undisclosed price.
Tristar, which has a fleet of 500 vehicles worldwide and corporate offices in
London, Manchester, Boston, New York and Hong Kong, last year operated in
conjunction with affiliates more than 500,000 trips in 80 countries, according
to the company. M7 and its affiliates, meanwhile, in 2011 handled nearly 40,000
trips, primarily in the United States. Tristar CEO Mike Fogarty this week spoke
with BTN senior editor Jay Boehmer about the transaction, corporate demand and
the effect of the end of Lincoln Town Car production on the livery of the chauffeured
transportation industry. An edited transcript follows.
What does Tristar get in the acquisition?
We acquired the assets of M7, so that includes the customer base, the employees and the chauffeur base. We're excited because the acquisition doubles our footprint in the U.S., so it is a pretty significant transaction for us. When we were going through the due diligence process, we looked at our customer base and their customer base. Although the profile was very similar, which is what you want in an acquisition, we didn't have much overlap. We each had different strengths, so our goal is to take the best practices of M7 and the best practices of Tristar and use that to deliver a higher level of service for the collective customer base—the theory being that the two companies combined are stronger than either would be individually.
Tell me about the size and reach of M7.
M7 is a national brand. They do affiliate work throughout the United States and some international work. M7 has developed some great reporting and road-show management tools that M7 customers find quite valuable.
They have in the range of over 30 chauffeurs in the Boston area. Their network business—their out-of-town business—is very significant, because they're strong in meetings, events and institutional road shows.
They're a very strong and capable management team, and the cultures of the two organizations fit well.
One of the reasons why I'm excited about this is it really increases our presence and it can help provide the platform for future growth to branded locations in other markets in the United States.
You said this doubles Tristar's U.S. presence. Where does this put your market share in the United States?
I would think it's definitely top 10 in the U.S., probably like seventh or eighth. And I want to be clear, that's not in terms of fleet size. That's in terms of revenue, because both Tristar and M7 have a significant affiliate business.
Do you pick up M7's affiliate network as well or must you sign your own contracts?
It will take some time. We operate on different reservation and dispatch systems, so one of the items that we're working on now is [assessing] which platform Tristar will move to. When we make that decision, we'll be able to implement and combine the two businesses on one operating platform. Until that happens, although we'll try to get some synergies where possible, they'll operate largely as they had prior to the acquisition.
When will you begin operating as one combined entity?
We're probably at least 120 days before we would be able to operate on the same platform.
Do you also get new corporate clients through this deal?
That's the goal. We want to bring everything into the Tristar family. The first week was really spent meeting with employees and customers and trying to communicate why we did the deal and what they can expect.
What are you seeing right now in terms of corporate demand?
Transient travel seems to be pretty steady. Meetings and events continue to have fits and starts. It picks up, then slows down. The good news is that there are some meetings and events. For a while, there weren't events—at least ones where they were willing to pay for ground transportation as well. It seems like things have improved a bit.
I do think that there continues to be a strong influence from purchasing in decisions on transient travel, and even in areas which may have gone unmanaged in the past, people are much more careful: "Are we getting a fair deal? Are we getting the right price? Are we getting the right service?" They're going through RFP processes even on high-touch business, which may not have gone through an RFP process in the past.
What are your thoughts on the future fleet makeup in the chauffeured industry after the Lincoln Town Car ceased production following the 2011 model year?
I'm at the International LCT Show, and everyone out here is wondering what the next vehicle is. At the show, typically it has been Lincoln and Cadillac, and there really have only been two vehicles at the show for the most part. Now, there's Lincoln, there's Cadillac, there's Mercedes, Hyundai, Toyota, BMW. It's crazy. The show is filled with vehicles.
How long before we see that settle out?
It may not settle out. It may not be one iconic vehicle type. It may be four or five vehicles based on regional preference, company preference or passenger preference. Most operators I see are starting to run some mixed fleets, and I haven't seen anyone commit wholly on one vehicle yet.
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