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as unique perspectives when it comes to the seem- ingly growing trend toward consolidation. McCarthy, owner of J.P McCarthy & Sons of Brook-


J


field, Massachusetts, has experienced the acquisition and merger process from all sides. With trend lines pointing to more consolidation of medium- and smaller-sized contractors, his perspective can provide helpful insights for those who will take the same ride. Meanwhile, Jon Leonard and his four brothers


recently purchased the family’s third-generation business, Leonard Bus Sales, based in Sarasota Springs, New York. Jon succeeded his father Mike in January as president of the 55-year-old firm, which is an IC Bus dealer for the Empire State’s 54 upstate counties and a statewide representative for Trans Tech. Jon’s experience underscores the positives of keeping a family business within the family. “We never pursued an outside sale because we had


a pretty clear path to keep it family owned,” he said. “We felt it was best for our family, customers and employees, and ownership was something I’ve always wanted to do and worked for my entire career.” Industry experts School Transportation News spoke to said companies without a next generation willing to take over, or those lacking clear succession strategies, are leading candidates for consolidation. And this for an industry that was essentially founded on the backs of family-run businesses. Other factors impacting consolidation include driver shortages, and changes in government regulations and expectations. Smaller contractors, for example, often pondering the future, recognize that larger companies have more recruiting muscle, purchasing power and compliance ability. And those same experts said they foresee a


continuing evolution in education support with con- solidation in the leading role, including more school districts outsourcing food service, janitorial and transportation services based on economies of scale. For transportation in particular, consolidation among school bus contractors is expected to produce cost efficiencies with volume, distributed operating costs, more efficient carrying costs and fleet uniformity.


All in the Family John McCarthy and his sister Rosemary started


working as children in the company founded by their father Robert in 1956. John’s first job entailed sweep- ing and washing the buses for $2.35 an hour. By the late 1990s, Robert L. McCarthy & Son had grown to 200 vehicles. “There was a lot of money floating


ohn McCarthy and Jon Leonard run compli- mentary yet non-competitive businesses in different states. They also share the common goal of providing a safe ride to students as well


around then, and my father saw an opportunity to take advantage of that,” John McCarthy recalled. About the same time, a transportation company based in New York made an offer that “just made sense,” he recalled. It included an agreement for the McCarthy offspring to remain on board, but their hopes of becoming the next generation to run the business disappeared. However, there were other advantages. “We made the most of it. I was able to run the other


companies they bought in Massachusetts, and I learned a lot about corporate culture and a how big company operates,” McCarthy said. “I learned about company policies, purchase orders, the HR depart- ment, and profit-and-loss statements, all of which were challenging for me at first. It was a whole eye opener as to how big companies operated. It was a good experience.” While McCarthy’s journey took him from a smaller,


family-owned business to the industry’s corporate side, circumstances would eventually return him to his roots. The corporation he worked for, which was one of the industry’s largest at the time, ran into financial trouble and filed for Chapter 11 bankruptcy protection for the first time in 2002. The company rebounded but was never as strong, he said. Compounding the existing financial issues, its school bus parking lots were left underwater in the wake of Hurricane Sandy in 2012. The self-insured carrier’s days were numbered. By December 2013, amid another reorganization and rumors, the Massachusetts school districts that the company served were wondering how they were going to get their students where they needed to go. “Things just kind of disintegrated, and it happened in a very short time—six weeks,” McCarthy said. The company pondered reorganization, selling


its entire operation or parting it out. McCarthy, who had been working with his region’s districts, leasing companies and bankers for nearly 30 years, rushed to “cobble together enough contracts” to launch his own company. “I signed an awful lot of personal guarantees,” he


Is any part of your transportation operation outsourced to a school bus contractor company?


75% No


25% Yes (Out of 164 reponses to a recent STN reader survey.)


www.stnonline.com 31


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