Three July Deals. One Question: Do You Tell the Customers?

The Situation

The Facts

Laona, Wisconsin, is not where you look for merger news. It is a town of a few hundred in Forest County, closer to the Nicolet National Forest than to any capital market. On July 14 it produced one anyway: Lakes Gas, the Upper Midwest's largest family-owned propane company, announced it had acquired Northwoods LP.

Two weeks earlier and 300 miles southwest, Central Farm Service of Truman, Minnesota, closed on O'Connell Oil Company of Le Sueur — a fuel, propane, anhydrous ammonia and dry fertilizer business whose roots run back to a 1930s general store. Butane-Propane News carried both announcements. Neither disclosed a price. Both followed the same shape the industry has watched for two decades: a multigenerational family business, a regional buyer with trucks already in the county, a signature in the middle of summer.

July is when this happens. Deliveries slow, the tank-set crews catch up, and owners who spent the winter deciding finally have the bandwidth to sign. The transactions themselves are ordinary. What they leave behind — a customer list belonging to somebody new, and a competitor down the road who reads the trades — is the part that lands on operations people in August.

O'Connell Oil is a case study in why the sell decision takes so long. Brothers Tom and Richard O'Connell bought their father JJ's store and fuel business in 1961. Pat, Mike and Brandon joined in 1979, 1980 and 2005. Mike's son Mark made four generations. In their statement to BPN, the O'Connells framed the sale less as a transaction than as a handoff to somebody they had known for thirty years: "we have spent the last 30+ years building our propane/fuel business and we have known Chad for all of them." The deal was advised by Legacy Energy Consulting.

Lakes Gas has been assembling this way since 1959, running rural service out of dozens of local offices across Wisconsin, Minnesota and the Dakotas. "We're excited to welcome Northwoods LP customers to the Lakes Gas family," CEO Trent Hampton said in the company's announcement. Both companies, he added, "share a strong belief in the importance of local relationships and putting customers first."

That language is not decoration. It is the whole competitive problem of a propane acquisition, stated in a press release.

Steve Abbate laid the problem out plainly in a Butane-Propane News management column published July 27, arguing over whether a buyer should announce a sale to customers at all. His answer, after involvement in hundreds of transactions: the choice to stay quiet does not really exist. Employees have to be told. Competitors find out regardless, and they will use the news. Abbate has watched rivals go so far as to advertise that a local company was sold — usually with the pointed detail that the buyer was a big corporation.

Which is the trap. A quiet transition invites the neighboring marketer to write the announcement for you, in language you would never have chosen. A loud one hands every customer a reason to reconsider a relationship they were not otherwise thinking about.

Abbate's checklist before deciding is operational, not promotional. Does the buyer already run trucks in the area? Is the former owner staying through a transition? Is the name changing? Are billing, credit terms or the remittance address moving? Every yes on that list is a customer-service call the CSRs will field in October whether or not anyone sent a letter in August. A changed payment address alone will generate more phone volume than the sale announcement did.

The buyers in both July deals appear to know it. Lakes Gas leaned entirely on continuity language. Central Farm Service is keeping a business that sells fertilizer and anhydrous to the same farmers it sells propane to, in a market where the ag relationship is the propane relationship.

None of these deals will move a national gallon number. They redraw three county maps, move a few thousand accounts onto new routing software, and give a handful of competitors an opening they did not have on July 1.

Somewhere in Forest County this month, a marketer is deciding whether to send those Northwoods customers a postcard. That decision has a longer tail than the purchase agreement did.

Action Steps

1. 1.If a sale closes near you — or you are the buyer — run the checklist before writing a word to customers: does the buyer already run trucks in the area, is the former owner staying through transition, is the name changing, and are billing, credit terms or the remittance address moving? Every yes is a CSR call to prepare for.