There have been a few notable acquisitions of privately-owned coach operators by the large groups over the last year. Perhaps the most surprising purchase was that of Pulhams Coaches in Gloucestershire by the continually expanding Go-Ahead Group. That was followed by the announcement of York Pullman being bought by FirstGroup.
Both large operators have form for buying coach businesses. Go-Ahead acquired Excelsior of Bournemouth in 2016 and Dartline of Exeter in 2022. First bought Truronian in 2008, and of course, both groups have a degree of existing coach operation within some established business units.
Such acquisitions bring key challenges and opportunities. The most notable test – and perhaps the most difficult to overcome – is leadership. Most privately-owned coach operators will be run by the proprietor and a very small number of trusted hands.
Those people live and breathe the business, often sacrificing weekends, evenings, early morning lie-ins and a good deal more to ensure continuity of quality and a full run-out. When it is your own money in the bank, there is always a very personal motivation behind ensuring that the company operates in the way that it needs to for maximisation of reputation and profit.
However, when those leaders step aside and are succeeded by employed managers, it is incredibly difficult to find people who demonstrate the same level of commitment, accountability, and mixture of skills.
It has been said here many times before that good, robust, consistent people managers who also understand the need to sustain the quality and presentation of the product are few and far between.
Most acquisitions come with the previous owner(s) on a retainer at least for a few months, during which a sustainable and effective team should be put together to take over in due course.
Another challenge is that of overhead. Many privately-owned operations will have a small number of managers undertaking a variety of different roles. These key employees, who wear many hats, are rarely replaced by people who can juggle the same number of plates, thus increasing the headcount.
Add in the inevitable – and entirely justified – health and safety costs to align a company with group policies, along with an apportionment of head office overheads, and the books suddenly start to look more challenging.
However, there is much to be positive about in such acquisitions, too. Big groups bring increased buying power, often leading to discounts on bulk purchases: Fuel (as part of either a hedge or a bulk spot-rate purchasing plan) can see reductions in price, and parts are often subject to group discounts or deals.
(Footnote: That is not always the case – one business revealed that it could buy new buses cheaper as an independent operator than it could through a subsequent group purchasing deal…)
In terms of personnel and expertise, big groups tend to have very proficient marketing experts and financial support teams, which can assist a new acquisition and open opportunities that may not have been explored previously. Engineering auditors, health and safety experts, HR personnel and plenty more quickly become available, all to good effect.
The coach private hire and day trip market is buoyant at present, and free from franchising endeavours, which makes it a truly commercial prospect.
Get the right person behind the desk with the right motivation and the correct mix of skills, and a real opportunity exists to generate income to complement an existing bus operation. But – and we have said this before – it is all about the right people!
