You need what Stephaich calls patient capital. That’s why private equity — with its three- to five-year time horizon, typically — doesn’t work well with a shrinking market.
“You can’t control these cycles,” he says. “So, if you don’t hit your cycle right, if you don’t get your timing right, you’re in trouble, if you have a lot of debt.”
Businesses that are owned by private equity with a lot of debt and a high cost of borrowing probably won’t fair well, Stephaich says.
Being ready for opportunities
If you have to make changes to your infrastructure anyway, make sure that you plan for the future.
Just like it upgraded its assets and training, Campbell Transportation also upgraded its accounting systems and IT. The company needed to invest in these platforms anyway, but it also used the opportunity to be better positioned for future growth.
“In the last four years, we’ve upgraded all of that and built what we call a saleable platform,” Stephaich says.
As the market gets more challenged, Campbell Transportation will be ready to take advantage of acquisition opportunities.
“So we’ve consciously invested in our platform so that we could integrate an acquisition relatively easily,” he says.
Another industry trend as the market gets challenged will be more consolidation, which has already started to happen. Recently, American Commercial Lines bought AEP River Operations, which are two of the biggest river transportation companies.
Stephaich thinks this will actually help Campbell Transportation.
“We see that as a good thing for us, for being a regional medium-sized company that’s coming up in the ranks,” he says.
With the majority of the investment behind it and its coal business down to 60 percent of its total revenues, Campbell Transportation is as ready as possible to weather the coming storm.
“We’re in the good position, we think, for what we hope is growth opportunities and new business opportunities,” Stephaich says.
Takeaways:
- Make a strong commitment to your strategic planning.
- There are no shortcuts for change.
- Make yourself ready for future opportunities now.
The Stephaich File:
Name: Peter Stephaich
Title: Chairman and CEO
Company: Campbell Transportation Co. Inc.
Born: New York City
Education: Middlebury College, language major; New York University, MBA in finance
How many languages do you speak? It was five. I was studying four at once. I was born in New York but I grew up in France and I went to French schools, so French. Also Portuguese (my ex-wife is Brazilian), Spanish, and I used to be completely fluent in German.
And then a little bit of a lot of other things — if you wanted to you could add them up to one.
What was your first job and what did you learn from it? I went to a boarding school, because my parents lived in Paris. I went to high school in the states, and I wasn’t allowed off campus.
But in the summer, I worked on sailboats as a deckhand. I got to go all over Greece and Turkey, and sail to all these really nice places and get paid to do that. I spent one summer in camp as a counselor up in the Newfoundland, New Brunswick area on the East coast of Canada. I went to Spain for one summer to develop my Spanish and worked on a cattle farm.
I got to learn about boats and the ocean and navigation and life on a boat. I got to learn about something that I’m now doing.
The other thing with boats is that you have to be totally self-sufficient. There’s no lifeline. You’ve got to navigate; you’ve got to take care of your engines or your sails or your food or your water. You’re completely self-sufficient in your little world, which is interesting because most people don’t have it in them to do that.
If you go could back to your younger days in business, what would you tell yourself? I did things a little bit differently. Before I got into this business 20 years ago, I worked on Wall Street as an investment banker, and I did all this international stuff. But I’m glad I did that. I got a lot of that out of my system before settling down and raising a family and doing the morning commute every day.
I have two daughters and I encourage them to do things when they are young and single. Go ahead and do something. Don’t just focus on the money. Look at the experience. Work with good people. Learn a lot and have some fun, but just get busy and do something that you enjoy doing.
You’ve got to be passionate about what you do.
