Ken Ganley drives toward $2 billion
Behind the dealmaker’s atypical acquisition of Central Cadillac
Who: Ganley Auto Group
What: Bought Central Cadillac for an undisclosed sum
Why it matters: Latest deal moves company closer to $2B sales goal for 2018
Ken Ganley is a natural when it comes to sales, moving his first car while still a gangly teenager.
“I was so excited that I had sold a car,” he says. “There is nothing better than that feeling you get when you make a sale.”
Well, maybe one. Buying a bunch of cars. All at once.
Which is what Ganley did a few weeks ago when he bought Central Cadillac, the latest in a string of acquisitions that has catapulted Ganley Auto Group from $400 million in sales in 2006 – when Ken took over from father Tom – to $1.5 billion this year and a projected $2 billion in 2018.
“I’m the guy who is actively out there looking for potential opportunities,” Ganley says. “I prefer a dealership that is underperforming, where I know I can improve it, rather than an extraordinarily successful dealership that might also be extraordinarily expensive.”
Here’s an inside look at how Ganley finally bought Central Cadillac, an extraordinary dealership he had sought for years.
An irresistible opportunity
Founded in 1942, Central Cadillac has been Cleveland’s Cadillac dealer since the end of World War II. The dealership can boast of an iconic, made-in-America brand, an impeccable reputation for customer service and a state-of-the-art facility on Carnegie Avenue in downtown Cleveland.
Despite his preference for turnarounds, Ganley couldn’t resist the opportunity to pursue the business and add the Cadillac brand to the list of brands he offers to customers.
“Growing up in this business as a kid, I was always fascinated by Central Cadillac,” he says. “Everyone in Cleveland knows where it is.”
On paper, it seemed like an ideal next chapter for the business. CEO Frank Porter was the third generation to lead Central Cadillac, following his grandfather and founder, George H. Lyon, and his father, Frank H. Porter.
When Ganley initially reached out to Porter several years ago, however, he wasn’t quite ready to sell the business.
“I put a note in a file and didn’t think much more of it,” Porter says of the conversation with Ganley. “As an auto dealer and a franchise business, you’re not a master of your own ship.”
Indeed, auto dealers typically serve at the pleasure of the manufacturer that they represent, in this case General Motors.
“They have to approve any transfer and they don’t give that approval lightly,” Porter says. “They also have the right of first refusal. You could present a deal to them and they could come back and say, ‘We want this person to take over and they are going to mimic the deal you turned into us.’ You never know when that’s going to happen.”
So both Ganley and Porter went on with their lives and their businesses. But Porter knew the day was coming when he’d have to make a decision on the future of his business. He just didn’t have a lot of confidence that a fourth generation of family ownership was going to happen.
Trying to keep Central in the family
Porter had made several attempts over the years to convince his sons, Allan and Scott, to take the reins of the company. Both sons had spent time in the business when they were younger, but had established successful careers in other fields.
“I said, ‘Guys, I know you have your own careers. But I’m going to do something here and I’d love to have you in the business with me. I’d probably treat things a little differently if you were here,’” he says.
Porter gave it his best shot. But in the end, the lure of Colorado’s fresh mountain air and Northern California’s warm Pacific breezes proved to be too much to overcome.
“The automobile business just wasn’t something that lit either of their fires,” Porter says.
Porter regrouped and considered his next steps. He sought the advice of Curtice L. Johnson, his long-time general manager. Johnson was interested in making a deal, but it wasn’t that simple.
“He was going to buy the entire stock of the company, which would have made it more affordable for him,” Porter says. “We still needed to do some bank financing. But when it was all said and done, he was going to have to mortgage everything to do the deal. He didn’t feel totally comfortable taking on that much debt.”
A move made with great care
With Johnson no longer an option, Porter made some calls to other dealer groups in the Midwest.
“These were people who had a number of franchises and enough financial wherewithal to step up to the plate for a Cadillac dealership and also had the ability because of their experience to get factory approval,” Porter says. “Those are the two ingredients you need.”
As he reviewed the options on the table, Ganley’s name stood out from the rest. The time he took to reach that conclusion wasn’t a matter of discomfort with selling to Ganley. Rather, he wanted to take the time to make the right deal for an organization that meant so much to him, his family and everyone connected to the business.
“Ken very much wanted the dealership,” Porter says. “One of our understandings was that he would hire all of our employees. That was really important to me because we have so many long-time employees and customers. I wanted to see them continue.”
Ganley says there was never a moment of doubt about what he would do with the team Porter had assembled.
“I’ll never forget my dad telling me that the only time you have a successful, good transaction is when the buyer is happy and the seller is happy,” Ganley says. “He said, ‘Ken, if you can’t accomplish those two things, something is going to go wrong.’ It’s important that the seller walks away thinking, ‘I got the right value for my business.’”
Ganley’s track record of success earned the blessing of GM and the deal closed on Oct. 2 for an undisclosed sale price. Ganley also took on a partner in the deal, bringing Chevrolet dealer Bob Serpentini into the transaction.
Living the dream
From the moment he sold his first car, Ganley has not only thought about selling more cars, but buying more dealerships.
“I always wanted to own a lot of car dealerships,” he says. “What’s exceeded my expectations is how our volume and profitability have grown. Our profitability is about 500 percent higher than it was from 2006 to 2008.”
The company sold between 15,000 and 20,000 cars when Ganley first took over the business in 2006. He expects to sell 58,000 cars this year.
“Ken has stepped in and redone almost every location that they own, which is a continuation of Tom’s work,” says Lou Vitantonio, president of the Greater Cleveland Automobile Dealers’ Association. “He knows the market well, the name is very recognizable and he has a very good reputation. The hardest thing in the world is to find the right people to run a store efficiently and profitably and have that upper-level customer experience. He’s done that.”
As Ganley strives to maintain and even enhance that reputation, he’ll continue to stay true to what motivated him to reach out to Porter in the first place: The search for the next great deal.
“I certainly don’t see myself slowing down,” Ganley says. “My phone may not ring at all for the next year. But if it does, I’ll be ready.”
How to reach: Ganley Auto Group, www.ganleyauto.com