VIC — Mick McGuire (Marcato Capital)

by Travis Johnson, Stock Gumshoe | September 17, 2013 3:00 pm

High Margin Rentals from the Value Investing Congress

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Source URL: https://www.stockgumshoe.com/2013/09/vic-mick-mcguire-marcato-capital/


One response to “VIC — Mick McGuire (Marcato Capital)”

  1. baygreen says:

    URI: Brad Jacobs a man with a hole in his heart, he comes in with his team paints the best picture on the wall and sells you the color of paint you need with his money and your clients. A man that would draw a circle and put the numbers in there and then tell you to use the paint code, you know IF THERE IS A 1 YOU PAINT IT WITH PAINT 1 AND SI FORTH. The picture looks real good after his team shows you all the advantages they buy volume so you get there pricing and so forth , every large company does this and nce they get you ubder there wing they talk we need to keep your management on for at least 1 year on a non compete. Very smart guy lets you think you are getting a good price and that picture looks better all the time. Then it comes down to the real value he wants to pay and he put a big number out there which is very simple what he is buing is you goodwill, heavy equipment is basically all the same price unless you are the biggest volume buyer than you get big brakes another number for that name of paint in his picture, he can’t go wrong you are blown off your feet and he did not have his audit crew come in and look at your receivables yet that does not matter here is where he wins is game. HE offers a price which is more than you thought heck you know what your business is worth and you can’t wait to sign. Now comes the hook on the fishing pole and you are still happy with the number he offered you thought you would never get that much but it makes sense with his size to buy equipment much cheaper than you unless you are the factory you could never compete with him. Now the fish is on the hook you both agree to this figure that was higher than your wildest dreams you sign the agreement and he puts two bags of money on the table, wow he even gives you 1/2 your money upfront all you have to do is stay on a year so his people can come in and learn your success or your clients what ever you call it that is your good will at it’s best. You get the other 1/2 of the money when his auditors come in and makes sure your books are what you said easy enough right sounds good such a nice guy you are still excited can’t wait to tell everyone all those hard years have finally paid off.Just hang out a year and get the rest of your money. One thing about the construction business is most don’t pay there bills till they get paid for there work ,unless you are a big boy the big clients give you a Purchase Order and you get 30 day money, except those are the clients that get the cheap rates, so if a small back hoe rents for 1650 a month they are paying 1100 a month your are losing money or at best just making the payments on the price you bought it for. Now say 80% of your clients pay $1300 to $1600 a month but you are waiting 90 days to get paid because they ca’t pay you till they get paid most of the time when the job is done or it is every 3 t 4 months if it is a big job. His auditors come in and do your books and see your float , well that was not in the deal and all of a sudden that other bag of money looses value you might break even if you had a handle on your credit but just like the contractor you can’t pay till they pay you. Now that second bag you where waiting to get after you taught them the ropes of you business and wined and dined and golfed and all the perks you had to do to keep you clients is no longer allowed, all your client who where your friend have URI’S COLLECTION PEOPLE ON THAT 30 DAY RENTAL CONTRACT , HE WINS WHILE YOU CAN’T WALK AWAY BECAUSE YOU SIGNED THE YEAR CONTRACT, IN ESSENCE YOU PROBABLY HAVE TO GIVE HIM SOME OF THE FIRST MONEY BACK AND NEVER SEE THE SECOND BAG HE GETS YOU BUSINESS YOU WORKED SO HARD FOR LESS THAN WHAT IT IS WORTH AND HE HAS A WHOLE FLOOR OF ATTORNEYS”S WAITING FOR YOU TO COMPLAIN. nOW YOU HAVE THE NUMBER ONE EQUIPMENT RENTAL COMPAnY IN THE WORLD THAT MORE OR LESS YOU PAID TO TAKE OFF YOUR HANDS. THAT IS HOW THEY DO IT IN GREENWICH CONN. AND DRIVE TO WALL STREET AND RING THE BELL. But you could not wait to get home when the deal was hot. Now you also find out you have a five year no compete. That is URI who by the way cuts all you good employee’s pay kind of take it or leave it and most of them do but now they can’t because the there jobs are just not there anymore s you can join the wal-mart crowd. There are some good rental companies that will make it but URI has gave the rental business a big black eye unless you where a yes man and never complain. So URI has made a living off all your life’s hard work that is how It will be interesting to see how long it last before the small business if ever can get his foot back in the door. I would say never but never say never in the construction business.

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