#286 - Buckeye Buys Berkshire

You are listening to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson.

Hello and welcome to the Independent Dealer Podcast brought to you by Buckeye Dealership Consulting. And Luke, today we have the Buckeye Dealership Consulting.

Yeah, it's so great. Today we got the captain of the ship, Rob Fox. And we're here to discuss a big development in the, in the Buckeye spear. And honestly, a big development for dealers as a whole. I know that I do business with Berkshire and do business with Buckeye, so hey, they're together now, so.

And here's the thing, like Rob is always cooking something. I don't know when this guy sleeps, I don't know when he like goes to dinner, I don't know when he has time to do anything. He is always cooking up something and this is a big deal.

Yeah, they do.

What, what's going on? Rob and Chris, welcome to the podcast. Give us the overview what happened for people that haven't seen the news or read your guys's press release yesterday. What's going on?

Well, you know, last Tuesday Chris and I signed a deal where the Berkshire became part of Buckeye. And Chris, you know, through the transaction has agreed to stay on with us for at least five more years, if not longer. And this is going to allow us to innovate, offer maybe a better product mix. Excuse me, a truck's going by, I'm at a conference, I apologize. And even maybe explore some new products like Garage Keepers for the buy your payer space.

Okay, okay, so let's give people background then. Chris, what is Berkshire and what does that bring over to Buckeye? So people that aren't familiar with your company or what you do or what you provide, what are those services that people can now see under the Buckeye umbrella?

Sure, I can give you a quick overview at least. Quick, quick for me. Rob knows that I go on and on and on. But Berkshire Risk Services is what I call a collateral services insurance agency. So we really were in the business of assisting creditors, collateralized creditors like our buy here pay here auto dealers in protecting the collateral that's out of their control. So we do really two things. We track insurance on vehicles that are out driving around America and getting into God knows what sort of trouble. We track for insurance to make sure that there is comp and collision insurance in place in case that vehicle is damaged in an accident or hailed on or otherwise destroyed. And then we provide collateral protection insurance which is just creditor placed physical damage insurance that many of our, many of our podcast watchers are familiar with to protect that vehicle in the absence of insurance under a personal auto policy. So it's tracking and collateral protection, or CPI as we abbreviate it. And then we do a little bit of gap, not much. And we do some vendor single interest or blanket physical damage coverage. But everything that we do is about making sure that cars that our dealer and finance company clients have an interest in, that they're insured against damage. That's our calling.

And Chris, how long has Berkshire been around? Because as long as I've been in, I've heard your name and senior conferences.

I formed Berkshire risk in 2007, but really the book of business dates all the way back to 1996, was when I first started in the collateral protection insurance business. And the book of business that I began working on back then became Berkshire Risk Services. So we have, and we have a few accounts that go all the way back to my early days in business.

That one thing I just want to nail down here because it's when I first started offering cpi, and I think some people out there kind of want to know the backstory of how this works. I thought that I would just offer CPI and it would just run straight through my. My reinsurance company. But then I found out that. Chris, your company, I'm having to go through your company to make my CPI work. What is the handoff there and how does that exactly work? Can you explain that a little more to dealers?

Oh, sure, yeah. And I get this question frequently. This is a question that a lot of dealers have. Why can't I just charge my customers who don't have insurance? Why can't I just charge them 100 bucks a month or $150 a month and take care of the vehicle? And the reason that you can't or you shouldn't do that is that when you take money from somebody or you charge them in return for promising to fix or replace a vehicle, you're in the insurance business. You have made yourself an insurance company. And the insurance business, especially the business of being an insurance company, is very highly regulated. So Berkshire Risk Services is technically an insurance agency. And what we do is we place the insurance that's actually issued by insurance companies like Great American Insurance Company or Ohio Indemnity. These are insurance carriers that are regulated by the state. They have big capital requirements, and they are filed and approved to do this sort of insurance. So it may seem needlessly complicated, but. But, but there really is no legal way to do it other than the way that we're Structured here.

So.

But Chris, and correct me if I'm wrong, but from what I understand is kind of the dumb guy here is your real secret to the sauce of Berkshire is you guys have got that software, right, that takes all of my DMS customers, customers out of my DMS and then matches it up with the insurance feeds and then kicks me out a real time report that says, hey, hey, this person dropped their insurance last night or they never got coverage or their coverage is wrong. That to me seems like the real piece to the puzzle. Correct.

That's a big part of it. We don't track for every dealer that we do business with. But where we do track, that's I think a big part of the value that we're bringing. And it's, some of it is programming and some of it is a lot of hard work that's happening behind the scenes here at our office. A lot of, a lot of phone follow up with insurance agents and insurance companies. Yeah, it's, it's, it's a bunch of work.

So. And that makes sense. And Rob, so tell me this. When you looked at this as bringing in the, the Buckeye umbrella, that's one of the biggest arguments I have, right, Is it's like I go and I sign up with a vendor and I say, hey, you know, you're going to be my website provider, whatever, great website. Oh, hey Mr. Customer. But what you do need is like five other vendors to plug into this website to really make it what want or to really utilize my website. You're going to need to sign up with these three other people. You know, is that part of the, and I don't know what the fee structure will be to use the Berkshire stuff that's coming over what you plan on doing. But is that part of it where you say, hey guys, now we're Buckeye and we provide the CPI and all these other types of products. And now we have this awesome, awesome company slash tool that's in our house. It's in house now, right?

That's exactly it. You know, we want, you know, we do our own formations, okay? And really we're, we're one of the only companies that do our own formations. We do our own, we have our own compliance department. We do our own books, records and taxes, our own tax returns. We have CPAs that can sign tax returns. We want to do it all because we don't want to blame somebody else. Okay? I mean you call your provider and they say, well, call this accounting firm. Well, that accounting firm doesn't know you and you're one small clog to them. To us. We, we know you. It's very important to us. So we wanted, we want it all to be under Buckeye. You know, we pick our phones up. We do not, you know, blame somebody else. We handle it. And that's really why we wanted to buy Berkshire, because we want, not that Chris did a bad job ever, by the way, but we just want everything to be Buckeye so that we can go out and just say, hey, listen, you know us, you know the owner, you know you, we, there's no, oh, you gotta call this company. Yeah, it's all one.

And that's. I tell you, that's so many car dealers out there listening probably think about the same thing. It's so frustrating not having your own service department and not having your own body shop because when things happen, it's hard to control the situation. I love the synergy of this. I think that it's really going to probably end up making Buckeye better and, and, you know, and making Berkshire, you know, more involved in, in dealers lives, I guess.

Yeah.

And part of what you guys talked about was Chris is going to stick around for a while. So those of you guys that are familiar with Berkshire and Chris and everything, him and his team are there. Right. This isn't a. Hey, we're taking the name and, and the computers and kicking everybody else out. So I don't think people will see disruption on that point. And Rob bought with. Is this the single biggest check? Rob, you don't gotta tell us numbers, but the largest check you've ever written or in the top five, top ten. Hey guys, real quick, just to interrupt this great conversation with Mr. Rob and Mr. Chris, want to let you guys know about Primaland still a great sponsor of the podcast and the place to go to get your monies.

Yeah, for sure. And things about, we talk about synergies when we talk about business, but Primerland is a, is a synergy for your business. And they work with Buckeye, they work with these other companies and they teach dealers how to be better dealers and they are able to lend money to make you grow and to be a better dealer. So when you're thinking about working with different vendors, think about the relationship those vendors have with other vendors and I promise you it will, it will be rewarded in the end, won't it, Jeff?

Yeah, they are. That's super true. Because they, they, once you get a reputation with these vendors, they refer you to other vendors and vice versa. Right. It's like they, the, the vendors that play well with other vendors are typically good vendors to do business with.

102Nd biggest.

More than a Kia?

Oh, come on.

Less than Texas Ranch.

It's probably the largest. Yes. Now that you say that, it's probably. You gotta remember, you know, I've got my truck master shirt on here. We do own a truck warrant service contract company that also costs a considerable amount of money.

But a lot of zeros, let's say.

Just a lot of pump up my ego here. It was enormous.

Yes.

Can I make, I want to make a point here because to the, I guess to the issue of synergies and potential for overlap. One of the things that really excites me about this transaction is that Buckeye and Berkshire have long been in the same. We service the same sectors, the subprime, deep subprime auto finance through the BHPH dealers, through some independent finance companies, and then also this commercial truck sector, which is an important part of actually both of our businesses. But we don't do the same thing in those two sectors. So there we have this great depth of knowledge. We understand the businesses that we're working with. But when we, when the businesses come together, really as Berkshire comes into part of and becomes part of Buckeye, there is an overlap. So we don't have this stress of trying to figure out, okay, who, who does what and do we have to replace people? They'll be fine tuning over time and I'm sure there'll be plenty of it. But this opportunity to multiply the effectiveness of both companies as one new entity is really exciting to me because there just isn't that overlap. That is a big part of the sort of the cleanup work on a lot of acquisitions. Now, I hope I'm not wrong there. That's the way I see it. That's what really excites me.

Now, if you want to mess up a good thing. I don't want to mess up a good thing is what I'll say. And one of the things to add to Chris, you know, we got together, we've been talking, but even like last week when we signed the deal, you know, just sitting down and we're talking about like all the possibilities. The growth is, is almost endless in, you know, gap. You know, we need a truck gap. We have a truck gap, but it's not ours. Well, now it could be ours. Like I said Property and Casualty. He and I together can figure that out and we know we can. So we're going to sit down in a room and that's Going to be one of our goals for next year is come out with a property and casualty product for buyer payer dealers.

Wow.

It's a big.

A big need in the industry for that, for sure. Hey, Rob, you know, so many of us dealers are entrepreneurs and we love business and we want to. We want to buy different businesses, and so many of us haven't done so. And if we have done it, it's not been successful. Can you talk dealers out there through what you look for in an acquisition? And once an acquisition is made, how do you make it successful? Because I've. I've started things. I've never made an acquisition. Sometimes it's successful, sometimes it's not. There's got to be a special sauce that you understand because you've done it and made it successful.

Well, you know, I don't want to. I mean, I've done it three times. Okay. One was, the first one was buying Truckmaster. And I got to watch it because I was the insurance company on it, and I got to watch it and I got to see the team that they had in place. Again, very little overlap. And somewhere I thought we could add value, which would be teaching truck dealers reinsurance and staff was just stellar. So that made that acquisition really easy. And the owner wanted out. Then if you. Look, I try to do DPGs, and I gotta tell you, I will, I would chalk that up to a failure. So.

Let me stop you.

You.

Okay, You.

You may think that was a failure, Rob, many of us out there don't think that was a failure.

I understand. But it didn't make money. Okay. If you look at that bottom line, okay, I got.

We appreciate your charity.

It was charity. Yes. I did have great visions. I mean, I thought. I thought I knew what I was doing. So I don't want to. I mean, when you say, boy, you do it, you do it right? I want to make sure that, you know, we put one chalk on the wrong side too. Okay? And then with Chris, I've known him for, you know, forever. I mean, and, you know, one day, you know, our story is crazy. We should never even do a business together. And we decided to do business. And then I knew his staff, and then I knew their quality, and then I knew the overlap of customers that we do have. And I knew the overlap we didn't have. They made it. I don't know. I don't want to say brainless, but it did. In fact, you know what? I'll tell you what, it was so obvious that, you know, there's an excitement around both camps that this probably makes more sense than the truck did and.

That, that, I mean that's an interesting sentiment that maybe we should it, we should see it if, if we don't see it immediately it probably doesn't make sense. But also you, you talked about the staff that people that those companies already have. How key is that when you look at making a, an acquisition?

I mean 100. I mean we don't know how to do CPI claims. Okay, yeah, I got a truck division. We know how to do diesel claims. We don't know how to do, you know, physical damage claims. We don't know the regulations. We don't. We sell it but we, we always relied on them. It's how to Overland park hands. It's how do you run it if you don't keep Bob and Chris. Yeah, you know, and you need to have those answers because you know do write a check for it and you got to make money back on and you got them to run it. You know, all you, all you pray is they don't make a mistake.

And Chris, on the other side of that, I mean, you know there's been many buy here, pay here, dealers bought and it didn't necessarily work out. I mean what when you know this may be your first sale of a company, what did you see in this that that made you think it was a good time to do something like this?

There's a couple answers to that. So the, to the, to answer the question how did I know this was the right time? I've been trying to figure out my own perpetuation plan for the company and kind of my succession plan for a few years now. I don't have anybody here who wants to take over ownership and my children are not, they're not interested in this business. So I knew I was going to have to find somebody to take the reins long term. So that was always in the back of my head. And Rob is a natural for a number of reasons. I have sold a business before. The first agency that I was an owner of was in part a CPI agency. And I sold to a very large, very successful company that continues to be very large and very successful. And it was a horrible fit. Culturally I was never happy there. And I ultimately bought my business back from that company to form Berkshire Risk Services. Going into this, these conversations with Rob and this transaction, what I knew and probably what was most important for me was knowing that there was a cultural fit. I know and like Rob, we have done so much in the past and Most importantly, we have had so many arguments, and that's important. We have argued and disagreed on things. And what I know, what I know from Rob is that you can have a toe to toe argument in good faith and five minutes later you're having lunch and figuring out the next thing you're going to do together. That is incredibly important to me. And I know that that's when you're working with somebody who has that sort of temperament, you know, that long term you can have open disagreements, work through them and move on. So culturally, personality wise, great fit. You know, the companies, as I said before, are in the same space, but they don't overlap. This was, this, this is as close to perfection as I can imagine in, in, in selling my company. So there you go, Rob. Yeah. Big, big shoes to fill there. You got to live up to that.

Yeah. Rob doesn't seem like the kind of guy that's going to hold a grudge. You know, he could get mad at him and he's going to. No, he's, he's going to forgive you. Move on. Gentlemen.

Super.

Awesome. We're definitely excited to see what this comes. You know, those that are Buckeye customers, those that are Berkshire customers, hopefully are excited as well. I'm going to see some awesome, awesome features, features and values that will make their life easier. Any closing remarks or words of wisdom for the audience?

Stay tuned.

Stay tuned. Big, big things. Big things coming.

Well, I tell you, you know, Rob, you know, you're, you're a vendor to the automobile industry and I tell you, there's a lot of dealers that look up to you and things like this re. Energize those dealers every once in a while because we see what you've done and we, we think, hey, maybe we could do, you know, maybe we can follow in Rob's footsteps. So from, from us dealers in the community, we appreciate your business acumen and, and you know, you're still trying to grow. I love that.

Yeah, unfortunately, it's a character flaw. If I think about my growing and dying.

There'S a lot of dealers that think the same way.

All right, gentlemen, thanks so much.

Thank you.

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