Benefiting the team - Why Nickell Rental decided to sell
by Connie Lannan
When Josh Nickell, now American Rental Association (ARA) vice president, equipment segment, was looking to grow his family’s Georgia rental business, Nickell Rental, he didn’t know where the process would take him. He knew, though, it was imperative to include his leadership team in the decision-making process and ensure that his dad, his team and his company would be the benefactors.
“My dad would tell you that he would never have grown the operation beyond two stores and a few million dollars. He is a creator and not a builder. I am someone who is much more comfortable taking something that someone has already built and scaling it into something bigger. So, when I came on board, I grew the company,” he says.
He remembers one meeting with his working leadership team. “We were in a meeting without my dad when I asked, ‘Do we want to be a stagnant rental company?’ We all agreed that we were looking for growth. We knew we needed cash to do that, so we decided to seek private equity. Dad had a large percentage of the business at the time, so making sure that he got fair value out of his percentage was important to us. Equally important was finding the right partner,” Nickell says.
They pursued that path for six months. “We got some offers. They weren’t quite what we were looking for to honor my dad’s investment in the business. They were a little more risk-averse than we hoped on growth projections,” Nickell says.
At the same time, “because we built a business that was also attractive to national rental companies, one of the strategic buyers (Sunbelt Rentals Co.) that had been talking with us for a while made an offer that provided good value for all the stakeholders, including the team,” he says. “They had a career path and a growth trajectory for everyone on the team and the financial backing to be able to do it. They offered my team an incredible value.”
Making the decision to accept the offer wasn’t just done by Nickell or his father. It was a team decision. “It was new for some of the people. It was the first time the team had to sign off on the deal. It created such high engagement among everyone on the team. They made the decision to be there. They were part of the negotiation. They had ownership of that,” Nickell says.
From the beginning, Nickell knew he wasn’t going to buy out his father. “The private equity firm was going to buy out my dad. I was going to leave all my investment in the company and be a shareholder. They were going to give him the retirement funds in the process. We couldn’t continue to grow the company and risk it with all his lifesavings invested in it. He needed to cash out on some level,” he says.
While Nickell hadn’t planned initially on selling the entire business, that was the end result. Another caveat is that his job changed quite a bit in the process.
“It wasn’t because Sunbelt wasn’t very kind to me. They were super supportive and kind, but one of the things I hadn’t been through was that I would be working for a billion-dollar company. You go from being company owner and CEO to working in an operational structure of a billion-dollar company. Many CEOs have a great career with their strategic acquirer, but I discovered quickly that it wasn’t the right fit for me at the time,” he says.
Even before they started down this road, Nickell, his father and the entire team had worked hard at making the business attractive to a partner.
“My dad thought that he needed to be attractive to other companies because I am an only child and what if I didn’t want to join the business? What if I came in and was bad? You want those opportunities available. Throughout the years, we kept working on the business. If you start depreciating your equipment and don’t invest, you might show a better profit, but the buyer asks, ‘What am I buying?’”
That was key, Nickell says, because in the end what made his operation a good value is “that we weren’t running it to sell it. We were running it to be a really effective business. When Sunbelt bought us, we were ready to grow. We had the team, the equipment, the processes, etc. They were buying a premium product. They weren’t going to have to come in and invest a lot in training and support. And our team was a really well-oiled machine. We had one of the fastest acquisitions at the time in Sunbelt history. We went from deciding we were going to sell to Sunbelt to closing in 45 days because the team was ready and prepared,” he says.
The sale occurred in 2018. Since then, Nickell has had an opportunity to reflect on what he learned from the process.
“I think there is good value in selling to a strategic partner,” he says. “It is a good learning process for that second- or third-generation owner. They can always go back and run a company on their own. That happened to my dad. When his operation was acquired by Taylor Rental, he had the opportunity to learn how to be a regional manager in safety and process. He did eventually open his own private company. It is not bad to be acquired and learn from it. It did not end up being my path, but for many people it can be very good.”
Nickell encourages other rental operators to “not be close-minded” about this possibility. “It could be the most beneficial short- and long-term strategy for everyone involved. I think that even if the goal is not to exit, everyone realizes they will have to exit at some point. It’s important to be intentional — to be thinking about it long-term. It is a smart decision as a business owner to keep options open,” he says.
It was a growth opportunity, both personally and professionally, Nickell adds.
“On the personal side, I learned that you are separate from your business. I had a personal mission statement at the time that I still have: ‘To lead people to greatness and empower them to do it for others.’ It has been refined over decades. I am pretty good at a lot of things, but what I really want is for each individual to achieve their greatness. I want it to have a ripple effect so they can do it again,” he says, noting that he relied on that mission statement throughout the transition as a way to help everyone on his team grow to their potential.
However, “when you lose the business that you have been tied to for 20 years, it is emotional,” he says. “You don’t realize how emotional it is. I used to have a green wedding ring, which was the color of Nickell Rental, that I wore. I had to change that because I was so emotionally attached to it. But at the end of the day, there isn’t a thing in my mission statement that says anything about Nickell Rental. That was growth for me, realizing that I can apply it to so many different things. I can help people and that I am not attached to one career path or one job,” he says.
On a professional level, the transition offered him the “opportunity to gain so much experience. I would never have had the opportunity to gain multicultural experience like I have been able to do if I had stayed at Nickell Rental,” he says. “It is easier to appreciate the moments and not the achievements. I look back and remember these great times — sitting around the coffee table and having these great strategic discussions. It was such a blast and a rewarding experience. At the time it is too easy to focus on the next Inc. Magazine 5000 award or next branch and hanging your enthusiasm on that rather than on the moments. Appreciating more of those moments and the process rather than the destination is important. There are so many other outside factors that control your destination but not the process and the time you have.”
The period from deciding to search out private equity to then selling to Sunbelt Rentals was “a big personal growth year,” Nickell says. “With private equity, I would have been giving up control of the company. I would still have ownership but not control. You need to have peace with that. If I am not the right person to be CEO in the private equity, wouldn’t I want to have someone else if it was good for my team? Me leaving was the best for our team, our customers and business.”