Over the last decade, we’ve worked almost exclusively for clients in one specific vertical, which, for lack of a better term, we call construction. Within that vertical, however, a large portion of our clientele has been crane, rigging, and specialized transportation companies, as well as the knowledge-based firms (insurance, finance, etc.) that service those types of companies.
What this specialization has allowed us to do is to see some of the patterns that have emerged over the last ten years and make some anecdotal observations about trends we’ve seen. Some of findings are more recent than others, but they were all interesting enough for us to share.
In no particular order, here are our first five insights.
Imagine you’re in the market for a new car. You’re familiar with all the major manufacturers (Ford, Chevy, Dodge, etc.) and you don’t have strong negative feelings for any of them. Now imagine you walk into a used car showroom and you see two cars parked right up front next to the showroom glass. They’re both freshly washed and freshly waxed. They both sparkle in the morning sun. The paint color is the same, and so are the options the car comes with. The description of the cars on the window sticker is exactly the same, word for word, and so is the warranty each vehicle comes with. Finally, the price is identical. The only difference is that one car has the Ford emblem on the grille and one doesn’t.
Which one would you buy?
My instinct is that because you don’t have strong negative feelings towards any one brand, you’d likely pick the Ford. After all, you know the brand. You remember it. You have an idea for what it stands for.
However, the primary reason I believe you’ll likely pick the Ford is this: when all things are equal, the most memorable brand wins.
This holds true for crane and rigging companies as well.
Of course, there are lots of factors that go into determining the purchase price of a company—and we’re reverse engineering this a bit—but we’ve seen, more and more, that having a strong brand strategy plays an increasingly larger role in an M&A transaction.
As an example, we’ve worked on two projects in the last six months alone where focusing the brand strategy and restructuring the brand hierarchy were initiatives that were decided by, and passed down from, our client’s private equity owners. These PE owners needed one cohesive story to tell about the companies they had purchased, so when it comes time to sell, they can be strategically positioned and packaged up neatly. The way to find and shape that story is through a solid brand strategy.
Gone are the days where you needed to have a spot on the Fortune 500 list or be publicly traded before you paid attention to your policies (or lack thereof) regarding DEI (diversity, equity, and inclusion) and ESG (environmental, social, and corporate governance).
Nearly every client we work with now has policies in place, or is in the process of formalizing policies, that memorialize the approach the company takes in these two areas. These approaches are also showing up on customer-facing communication vehicles, like websites and corporate literature. Whereas ten years ago this wasn’t the case, it very much is now.
This isn’t new, and many of you know this, but safety performance isn’t a differentiator anymore. It’s a “must have,” not a “nice to have.” Saying your safety performance is a differentiator is like saying “honesty” and “integrity” are your company’s core values. Of course they are. Those are the minimum expectations of a company doing business these days. You absolutely need to be honest and integral. You also absolutely need to be safe—in everything you do.
So be excellent when it comes to safety. Be innovative in your approach to safety. But don’t expect it to be your differentiator. There are other ways to set yourself apart. Stellar safety performance is the price of entry into this business.
For businesses looking to grow, marketing (and specialization) is no longer optional.
We’ve all heard the stories of businesses that grew through handshake deals and referrals, but that playbook is forty years old at this point. Handshakes and referrals are still important, but the only way to gain visibility is to market—and to market strategically. And the only way to strategically market is to first specialize. Specialization narrows competition and increases value, which facilitates price premium. It’s also worth remembering that referral business is almost always lateral. Similar clients recommend similar jobs. Upward momentum is fueled by visibility within a group you’re not currently visible to.
We’d love to hear what you think. Drop us a line and share your thoughts.