The rapid growth of FreedomRoads LLC gained through a series of acquisitions represents a growing trend among small businesses, according to a report in the Chicago Tribune.
In just 18 months, the Lincolnshire, Ill.-based company includes a network of 52 RV dealerships and 2,300 employees who sell more than 36,000 RVs a year. And with annual sales surpassing the billion-dollar mark, the new company has far more clout with RV manufacturers and financial institutions than any single dealer could wield.
According to Marcus Lemonis, chairman and CEO of FreedomRoads, the firm is getting better prices on vehicles and better financial deals from the banks. “We are able to be more profitable as a group than as individuals,” he said.
As rewarding as running a small business can be, Lemonis and growing numbers of entrepreneurs recognize that size has its advantages. And with current market conditions conducive to mergers, growth through acquisition is becoming a viable option for many small companies.
The overall volume of merger and acquisition deals nationwide hit $834 billion in 2004, up 46% from 2003, according to a Thomson Financial report. And the trend is expected to continue.
While Lemonis had experience building AutoNation, a consolidator of auto dealerships, he couldn’t have grown FreedomRoads so quickly without the backing of another entrepreneur, Stephen Adams. Adams owns Affinity Group Inc., parent of RV Business and RVBUSINESS.com.
For Adams, the investment in RV dealerships helps round out his holdings and further capitalize on the growing market of RVers, Lemonis said. With Baby Boomers aging, “We happen to be at the right place at the right time,” he said.
Still, FreedomRoads’ acquisition strategy depends on Lemonis’ ability to convince successful small-business owners throughout the country to trust him with their ventures.
To ease the process, FreedomRoads lets dealerships keep their own company names, while adding the FreedomRoads logo. The dealers also keep their land, with FreedomRoads leasing it from them. The owners generally stay on to operate their stores, as do the employees.
Some are elevated to new positions with the umbrella company, which has just 13 people at its corporate headquarters. Randy Thompson sold his dealership, Crystal Valley RV in Island Lake, to FreedomRoads in 2003 and now is executive vice president of corporate strategy for the company.
He said he has no regrets about selling. “I like having someone help share the responsibility with me, instead of having it all on my own shoulders,” he said.
The 70 employees at Crystal Valley RV are better off, he said, because now they get a full benefits package he couldn’t afford to offer before. Besides a health plan that includes dental and vision insurance, FreedomRoads offers life insurance and a 401(k) plan in which the company matches 66 cents for every dollar an employee invests, up to 6% of their pay.