How Are You Preparing for the Miller-Knoll Deal?

It’s been a while now since Herman Miller announced plans to acquire Knoll but the aftershocks are still reverberating as we try to figure out what it all means, both collectively for the industry as a whole and individually for our own businesses.

What will the deal mean for the two manufacturers’ current distribution networks? How will their competitors, particularly Steelcase and HNI, respond to the emergence of a new mega-competitor with combined annual revenues of some $3.6 billion?

Right now, the best most of us can come up with in the way of answers is little more than educated guesswork. Time will tell, as they say.

But this much, at least, is clear: There’s a new definition of critical mass in the office furniture business and further consolidation, at all levels of distribution, is inevitable.

And given the prospect of greater consolidation, the biggest question that emerges from all this, both for dealers and manufacturers, is a pretty simple one: Which side of the field do you want to play on going forward … acquirer or acquired?

That may not be a question most of us will feel very comfortable about but we can’t avoid it. Putting it bluntly: More consolidation is coming and one way or another, you’d better be ready for it!

Paradoxically, perhaps, it turns out there’s not that big a difference between how you prepare to become an acquirer and how you prepare to be acquired.

If your goal is to become the big fish in your pond you will need the support of your manufacturer partners and local bankers and that means being able to make the case that your dealership has what it takes to bulk up and move to the next level.

If you’re looking to be acquired—and as the folks at Knoll will tell you, that can be a perfectly reasonable option under the right circumstances—you’re going to have to make sure your dealership is operating in a way that will generate a suitable purchase price for all you’ve put into the business over the years.

The bottom line: Whether you’re planning to be the acquirer or be the acquired, your top priority right now has to be making sure your operations are running as smart and as lean as they can be to make the most of the opportunities that will be coming your way in an industry that all of a sudden is more dynamic and unpredictable than it’s been in a long time.

With that in mind, ask yourself these questions:

• What are you doing to drive down operating costs in your dealership?
• How are you maximizing the value of your customer list and the contracts and relationships that list represents?
• How well have you automated repetitive transaction processing in your dealership and what plans do you have to implement further automation in the next six months?
• Where does knowledge of your dealership’s core processes and procedures reside … with your people or in your business system?
• What percentage of the total headcount at your dealership is customer-facing? What was it last year and what do you expect it to be next year?

If you’ve been around the office furniture industry for any length of time, you probably already know what the answers to these questions should be. Now, as the industry begins to redefine itself in the wake of the Miller-Knoll deal, the stakes involved how you answer them have just gotten a whole lot higher and the downside, regardless of whether you’re looking to acquire or be acquired, just got a whole lot deeper.

If you’d like to do something about improving the way you answer those questions, we can help. Want to find out more? Contact Avanto’s Matt Danyliw (PH: 860-400-6030; Email: mdanyliw@goavanto.com) or visit www.goavanto.com/).