The conventional wisdom in the rental industry proclaimed it loudly — NationsRent was dead. Calls came in to RER on a regular basis saying “NationsRent is filing for Chapter 7 this week!” or “NationsRent is liquidating all of its assets, starting tomorrow.”
But tomorrow never came. And everybody underestimated the resolve of a wide range of people, starting with a New England rental man who has lived, breathed and slept rental his whole adult life.
In some ways Bryan Rich is the polar opposite of the original NationsRent management team comprised of good businesspeople who lacked experience with this peculiar niche that is rental. Rich had sold his Boston-based company Logan Equipment to NationsRent and became determined to save his investment as the company drifted toward bankruptcy. He, along with investment banker Doug Suliman, put together a team called Phoenix Rental Partners to buy a portion of the debt. As they developed a plan to save the company from bankruptcy, they consulted with another innovative businessman with rental experience coursing through his veins — former American Equipment CEO Jeff Putman.
Putman was an experienced rental executive, and the architect behind the rise of one of the industry's most innovative firms — AMECO, then known as American Equipment. American Equipment was an unusual hybrid that served as a dealer for a number of major lines, such as Grove Worldwide and Case, and also a pure rental house. After being acquired by Fluor Corp., American provided equipment rental and fleet management services for Fluor projects around the world, and marketed its services to other companies around the world as well. Putman helped develop a unique model that was adept at responding to unusual challenges for which there was no blueprint.
And that's what awaited Rich, Suliman and Putman as they prepared for the battle of NationsRent. They had to put together a plan to rescue a company saddled with crippling debts and convince creditors and investors that they could pull it off. They had to develop unique legal and financial solutions and then be prepared to bring to the Fort Lauderdale, Fla.-based rental firm something that it had never had — operational skills and ability to bring together disparate segments into a functioning, smooth whole. The challenge of rescuing NationsRent may have been one of the most unique endeavors facing any rental company in this industry's history.
The reality is the deal has been done and NationsRent emerged from Chapter 11 bankruptcy with a healthy balance sheet, a dramatically reduced debt, and a new rental-savvy management team with a new philosophy and method of doing business.
Members of the original management team that created NationsRent as a roll-up were accomplished business people who knew how to put capital together, and understood the mechanics of acquisition and consolidation. However, they created NationsRent to be a pure rental company, interested in promoting rentals, but ignored the many other facets necessary to function as a full-service equipment company. Rental companies succeed best when they can respond to the full gamut of customer needs, including renting and buying equipment, new and used, and having it serviced. A rental company requires infrastructure for all those facets.
“NationsRent was a rollup and the strategy was pure rental,” says new CEO Putman. “They made 58 acquisitions in the process of rolling the company up. Some had more components of service, some had less. But the pure rental strategy took out service and sales and parts and other things that Bryan and I have found to be very profitable. They are what I would call ‘sticking items’, that make customers stick with you through good times and bad times. Those services were eliminated and the company didn't have a way to differentiate itself from other companies. So they used branding and advertising and promotion. While I consider the branding and the logo to be a huge bonus, a fantastic asset, we're going back to a full-service type offering.”
In the new NationsRent structure, there are six regions and each regional vice president will have considerable autonomy in developing the business in his region. Northeast regional vice president Bill Stewart, a 20-year veteran of the rental industry who worked for Logan Equipment along with Rich until it was acquired, explains his approach to full service: “Full service means if the customer wants to rent, we'll rent,” Stewart says. “If they want to buy, we'll sell. We'll sell new and used with a big emphasis on service after the sale. And we'll service not only what we sell them, but we'll service what somebody else sells them too. Our mindset is full service, what they need us to do, not what we want to do. We'll do big and small repair, big and small rentals, big and small sales, big equipment and small equipment.”
The regions are already beefing up their service staffs, adding, where necessary, personnel and infrastructure to handle additional work. NationsRent is also taking steps to ensure its staff is up to the new level of challenge. “We are working with our core manufacturers to develop the same level of training as they would make to a dealer,” Putman says. “We asked those manufacturers if they could facilitate that in this ever-changing environment and the answer has been unequivocally that they would be glad to do that.
In essence it's a back-to-basics approach. “What happened in the past decade is that an intensely relationship-driven business tried to substitute advertising and financial leverage or branding for the close relationships between provider and customer, Putman says. “It's not that any of those things are bad, it's just that [that trend] had the effect of substituting big and flashy for close relationships and service. Our goal is to put the service back in the business.”
That said, Putman says Nations-Rent will continue to develop its branding program and has reserved a portion of the budget for advertising as long as it is viewed as productive.
To Putman and Rich, the new company is almost a new fusion, combining the various elements that make an equipment company successful. “Is this going to be a dealership? No. A rent-to-rent company? No. A rent-to-sell company? No. Just full service. It was a national rollup, and now it will be a six-region rollup, with each region taking on its own personality and character, but leveraging the strengths of a national company.”
While the bankruptcy period tested the character and resiliency of NationsRent's employees, those that remained seem extremely bullish about the company's prospects for success. “We were upfront from the beginning of the bankruptcy that we needed a superior level of service to survive,” says Tim Stommel, vice president of the Midwest region. “The odds of surviving a bankruptcy aren't high. We retained quality people and the customers saw that the information they were dealt by competitors, who said that we would liquidate and go out of business any day, was disproved. Equipment was arriving in solid condition, and our employees lived up to their commitments, so it became less of an issue in the back half of the process.
“We have more customers than we went into bankruptcy with,” adds Putman. “Though we lost some, we gained quite a few more. The infrastructure of the company is not in shambles, and the fleet is in good shape. A high percentage of our people stayed. For those that are still with us, this is a very exciting opportunity.”
