Being interim CEO of United Rentals was probably not a particularly enviable position last November in the aftermath of the collapse of the company's acquisition by private equity firm Cerberus. The company was about to be acquired for $34 a share, and for those that bought their stock when it was in single digits a few years before, they were about to reap a tremendous windfall. And for anyone who bought when the stock was at $15 or $20 or so, still an impressive profit was about to be made.
When they woke up and read the news about Cerberus withdrawing from the acquisition on that November morning, needless to say, there were some dark moods in the hallways of United Rentals and among investors that had held on to their stock. The mood didn't brighten when United Rentals' stock price plummeted to nearly half that value as the Street reacted negatively to news of the deal's collapse.
I can imagine trying to keep everybody's spirits up in the face of that was a bit like trying to captain a boat in the middle of a storm. And what many of those people didn't know yet was the economy was about to go into a fairly severe construction downturn, an economic trough the depth of which has surprised many so-called economic experts as well as people in the equipment rental market. Many have called the housing downturn, the credit crunch, the rise in fuel prices, accompanied by a number of other factors, a “perfect storm” of disastrous economic conditions.
Through all these tough conditions, as interim CEO, Michael Kneeland has managed to keep his hands on the wheel. While its stock price has continued to hover at about half of that $34-a-share price, Kneeland has led the company through the raging waters. He has had to cut back on buying new equipment, close some branches and cut into headcount a lot more than he likely wanted to do. As a three-decade veteran of the equipment rental industry, Kneeland is a believer in strong service-oriented operations and undoubtedly was loathe to risk cutting into that. But tough times require tough decisions and Kneeland has had to make his share of them, all the while knowing full well that as interim CEO his own position was less than secure as the board of directors was searching for the ideal CEO. Anybody who has had to operate while under a similar microscope would know it's not the most comfortable way to live.
I don't know how many candidates the United Rentals board considered or interviewed or who they were. I do know that a couple of days before we went to press with this issue, the board decided Kneeland was its guy and he was named permanent president and CEO — whatever permanent means in this crazy, fast-moving century. (We'll have more details on the selection of Kneeland in our next issue and you can read about it online at www.rermag.com.)
Since I don't know who the other candidates were, I can't say definitively that Kneeland was the best possible choice. But from what I understand, most people at United Rentals have confidence in him. He has 30 years of experience in this industry, he knows what it takes to run a strong equipment rental operation and, from all I hear, he remained positive, level-headed and optimistic through obviously trying circumstances. So while I'm not privy to all the factors in the decision, I offer my congratulations to Kneeland and to United Rentals' board of directors for what appears to be a solid and courageous choice.
This month RER welcomes Brian Alm, former editor of Rental Management magazine, as a periodic contributor to the magazine. We're calling his column “The Rental Observer” — observer because Alm has a keen eye when looking at the rental industry. Whether he is observing how companies' go to market — and he served in a marketing and corporate communications capacity for years with Deere & Co. — or trends in the industry, or how a rental center is laid out (his topic in this month's issue) — Alm has a sharp eye for detail and the benefit of perspective from years of experience. We're pleased to have Alm's keen observations at RER and I hope you'll enjoy his “Rental Observer” columns several times a year.