Pat Covey, president and COO of U.S. operations at Davey Tree Expert Co., has seen the company’s revenue more than double and its geographic reach expand since coming aboard in 1991. The company owes much of that growth to an emphasis on acquisitions that has brought 30 companies under the Davey umbrella in the past decade. That’s a pretty incredible achievement, and somewhat surprising.
“If someone would have said five years ago that you would do five acquisitions in the first six months of the year, I think we would have looked around and said, ‘How are we going to do that?’” Covey says.
That sentiment can be traced back to early acquisitions that had been hit or miss for Davey, he says, which left the organization hesitant to aggressively pursue strategic growth. It’s strange, then, to consider that Covey would oversee two of the largest acquisitions in Davey history.
Fear of the unknown
When Davey’s chairman, president and CEO, Karl Warnke emphasized top line growth in 2008, a goal was set to achieve 40 percent of it through acquisitions. In order to see that directive through, the company had to find the source of its anxiety. Part of the issue was its organizational structure.
“I think we figured out a process, in a way, that said we need to have an acquisition team in place. We can’t just have this as being a job that we plug a person in if they have time. We needed a more devoted, consistent approach to the process. We needed to put people in the process that had been through it a few times and not just whoever was available,” Covey says.
The company’s confidence in the process was cemented after it completed two of the largest acquisitions in company history that year — one for $50 million and another for $45 million. That made smaller acquisitions less daunting.
“That repetitiveness, that ability to go through it a few times and learn from our mistakes has really helped us improve the process of bringing companies in and knowing where the hurdles are,” Covey says.
But there’s more to an acquisition than just the purchase. What happens after a sale, Covey found, is critical to its success.
Building confidence through success
Strategic acquisitions can be sensitive matters, requiring discretion and trust between the parties. Covey says the company’s outreach to its competitors has improved, as has its ability to build the relationships that are required for success, the latter of which is very important to sellers who don’t want to see their legacy tarnished because of a sale.
“If they’re leaving the business, if they’re going to turn the keys over to a company (they want to know) that company is going to take care of their employees and preserve their legacy,” he says.
Davey has gotten better at building relationships with sellers to ensure a high degree of trust going into the transaction, Covey says, which has helped the process as well as the pipeline of potential deals.
It’s not enough, however, to be good at dealing with sellers. Among the assets transferred in these deals are people, and Davey has come to realize the importance of understanding the state of mind of those who come to the company through an acquisition.
“You have to be very cognizant of the fact that the people coming in are fearful of a lot of things. It’s a new ownership for them, they’re afraid for their jobs, they’re afraid for their benefits. You have to really be aware and cognizant of putting yourself in their position and try to address their concerns. Keep them engaged, communicate as much as you can, and be honest, truthful and straightforward. Never say anything that you can’t follow through on,” Covey says.
Emphasizing communication and finding ways to make it easier for the acquired employees to accept that their world is changing prevents losing engagement and productivity, he says.
“I think we’ve managed that process very sensitively, and with an eye toward doing what’s right for the employees that we’re bringing in, and giving them great opportunities to be successful,” Covey says.
Now that Davey has shown the industry it’s interested in strategic growth, and the company has handled each acquisition well, word has gotten out and inquiries are coming in weekly from companies that are interested in selling, according to Covey. Its success and the positive response have gone a long way for Davey’s confidence in its ability.
“Every one is different. Every single one has their own little challenges, but we’ve been through it and we’ll work though it and it will be fine,” he says. “And I think that once we got past those fears, it’s just become a lot easier to bring on five acquisitions, or however many we need to do.”
Challenging the Davey way
The acquisitions have had a secondary benefit of adding to the pipeline of managerial candidates who can assume more responsibility in the organization, and most importantly, bring fresh ideas to the table. That’s been a benefit to Davey, an organization Covey says can get mired in its own way of thinking.
“We’ve done a nice job of working people into the management team from some of our acquisitions in particular. I think we’ve acquired some talent, some VPs, some upper-level people that allow us to not get a ‘Davey silo effect.’ You can tend to get that way with a management team that’s been here forever,” Covey says.
While having a bevy of managers who have been with the organization for a long time confers the benefit of wisdom, it can perpetuate the notion that the Davey way is the best way.
Before those new ideas can be heard, however, incoming managers must learn to work with a group of people who have been together for a long time. Those who have come in and been successful have learned to navigate by being tactful — sitting back, getting the lay of the land and addressing their issues at the right moment.
“Five years ago we probably looked a little bit differently from that perspective, but with the influx of new talent from outside I think the general view is that there’s a good acceptance of outside ideas and new ways to do things. I think we’ve improved a lot there,” Covey says.
The influx of new ideas has helped Davey examine its processes. An example is when it bought The Care of Trees in 2008. He says that company had bright people who were more progressive in the way they handled the client experience, selling and marketing. Realizing this, the management team at Davey took a step back, re-evaluated its client experience and devised a best-practice approach that began with extensive surveys and questionnaires to get feedback from clients.
“That was an eye-opener from the standpoint that it really forces you to re-examine your own perceptions of how well you’re doing. If you sit there and don’t get feedback, I think you can be swayed or disillusioned in the area where you think you’re doing everything right. But by getting the feedback from our clients, we learned a lot about what we needed to change and we made a lot of those changes.”
One key change Davey made was to automate its process of providing clients with in-the-field quotes. The company relied on an automated client relationship management tool accessed through mobile devices to provide professional-looking quotes.
“That’s kind of new for our industry. We don’t have a lot of competitors that are very far along with that process. We’ve really tried to break down some walls with regard to the technology we use and the way we interact with our clients,” Covey says.
Bigger, stronger, better
Being exposed to the way other companies operate has shown Davey that many of the challenges it faces are industry wide, and that it’s responding to those challenges at a very high level, which adds to the company’s confidence.
The company has now attached its name to several brands across the country — Hartney Greymont in Massachusetts, Maier Tree in Minnesota and Wolf Tree in Tennessee — proof that it’s strategic growth initiative is on track. And the company is still learning.
“We do a lot of things right, but we’re also willing to remain open-minded about new ways to do things, and we aren’t afraid to try and make changes,” Covey says. “All those things, from a cultural standpoint, have really helped us. That outside perspective, winning the battle, fighting through adversity of integrating companies has built confidence, and better business people.”
- Step outside of your comfort zone.
- Open up to new ideas.
- Be true to your word.
The Covey File
NAME: Pat Covey
TITLE: President and COO of U.S. operations
COMPANY: Davey Tree Expert Co.
Born: Eau Claire, Wisconsin
Education: Earned a bachelor’s degree in business with a focus in finance and accounting from the University of Wisconsin, Madison.
It’s hard to find much about you on the Web. Why are you so absent from the Internet? The social media thing has never really caught my attention that much. I tend to try and keep my private life private, and I just don’t really like the idea of Facebooking a lot, or Twittering. I personally don’t find myself all that interesting that I think everybody’s going to want to know what I’m doing all the time, and I’d rather just keep it more private.
Assume that time travel is possible, and you have a chance to go back in time and observe, but not affect, any moment. What would you like to see and why? I think the thing that would really be interesting to me is the writing of the Declaration of Independence. I think that whole environment around how the U.S. came about, and the revolution, and ultimately the documents that we use to define our democracy, and the way we live, the people involved with that and the way it went about, I think, would be really very interesting.
We’ve come to try and interpret what they were trying to do, and I think to be able to go back and see exactly what they were trying to do and how they came to conclusions on things would be kind of interesting, given our current political environment where everybody has, I think, their own interpretation based on whether they’re on the right or left of the equation.
What are your plans for the first year of retirement? I would definitely like to travel. I took a year in college and went to England and worked in a pub, traveled around, hitchhiked and rode trains. And I look back on that and — well, I probably had about $50 in my pocket — it was one of the better experiences, and one of the things that really helped define me as a person. And I would definitely go back to that kind of carefree, don’t know where I’m going, go to the train station and see what train is leaving, and jump on and go — just kind of free travel in Europe or Asia or South America.