Executive viewpoint

During my ten-year tenure with Hoover, the company has undergone many acquisitions, large and small. Between 2008 and 2011, we acquired a few small fleets of tanks via asset purchases; however, our real acquisition was in 2012, when we acquired Consult Supply in Norway. This expanded our footprint in the cargo carrying unit (CCU) market into the North Sea. The next acquisition was Dolphin Energy Equipment in 2013, which expanded our presence in the U.S. CCU and waste equipment market.

In early 2014, we acquired Container Company of Aberdeen (CCA) in Scotland. Later that year, we completed a debt and equity recapitalization, where a majority of Hoover was sold to the private equity firm, First Reserve. First Reserve is the oldest and one of the largest equity firms in the world dedicated exclusively to energy. One of the reasons for this transaction was to give Hoover the ability to pursue larger acquisitions, going forward.

In 2015, Hoover purchased Tech Oil, which expanded our waste equipment offerings in the Gulf of Mexico. Finally, in October 2016, Hoover merged with the Ferguson Group and CHEP Catalyst & Chemical Containers (CCC), combining three companies into what we are today—Hoover Ferguson Group. By bringing together three great firms and two strong shareholders (Brambles and First Reserve), we created a global leader in the container, workspace and packaging solutions sector for the energy, petrochemical and general industrial markets.

Our motivations for pursuing an M&A strategy have changed over time. When we were a smaller company, we had a vision for what we wanted to create—a global company with full product and service offerings capable of serving our customers (such as major IOCs) in all areas of the world where they did business. We were not, at that point, looking to acquire new customers, but rather expand our presence, products and services to existing customers in new locations. Thus, our acquisitions supported that strategy.

As a result, Hoover Ferguson today operates in 70 locations in 26 countries that include nearly every major oil and gas basin, and petrochemical manufacturing center. With those goals achieved, Hoover will focus on achieving numerous revenue synergies from this transaction, and continue exploring opportunities that allow the company to enhance its capabilities.

The reason to explore M&A opportunities is the same as in previous years. Ultimately, companies want to grow revenue, improve costs, provide better product and service offerings to end-customers, and create a great workplace for valuable employees. Our clients are continually looking to improve their cost structures. In offering them a differentiated or bundled service that wraps various products and services into a single offering, in locations worldwide, we can leverage increased purchasing power and pass along those savings.

Pursuing an M&A strategy comes with risks. Overall, we want “one plus one to equal three.” To ensure this happens, we ask ourselves questions such as, “how do we make each of the two unique cultures blend together?”, or “How can we make sure we retain and motivate the wonderful people in each of the organizations?” To manage the “people issue” in any merger, you need to move slowly and thoughtfully. Teams from both companies spend a considerable amount of time together before the transaction closes, in an effort to get to know each other well, establish a working relationship, and, hopefully, build a trust between one another.

It is important to communicate the cultural values of the newly combined business up front. Our cultural values are based on a simple term we call PACTT—Passion, Accountability, Courage, Transparency and Teamwork. We work hard to maintain a transparent, open, communicative culture. Everyone must be onboard with the strategy, and working together to achieve the same goals.

When working to complete a transaction, our team works through a long list of issues, incorporating plenty of discussion with our new colleagues in an unbiased, non-judgemental way. We like to say, “there are no stupid questions.” Ultimately, we depend on the people that are closest to the issue to make the decisions, but we ask many questions along the way.

Furthermore, if one path doesn’t work, we always can try another direction later. The biggest mistake that many companies make is that when faced with a lot of difficult decisions, they do nothing. That, ultimately, can lead to more problems than making a decision, even sub-optimal.

The Hoover, Ferguson, CCC merger was transformational for all three firms, fulfilling our vision of a truly global business. We are already well down the road to ensuring our processes are well-oiled as a new entity; we will continue our organic growth, and roll out additional products and services globally. We will continue to look at acquisitions, but the aim now is to enhance our product offerings or services, or bring on a new capability, rather than expanding our geographic presence.

The M&A market for energy has been moderately frustrating, in that valuations are still high and have not reached realistic levels yet. Part of this is that there are so many interested buyers out there. Something is only worth what someone is willing to pay for it. The U.S. shale plays are strong right now, but the offshore market is slow, and will probably remain so throughout this year. For our market segment, the CCU and IBC market is still fairly fragmented, with many regional companies and only a few truly global players. As the market matures, we will see further consolidation via M&A.