Scenes From a Marriage

Sept. 1, 1999
Uniting two companies totaling $1.5 billion in revenue is a challenging task. But to United Rentals' Wayland Hicks and U.S. Rentals' Bill Berry, the task

Uniting two companies totaling $1.5 billion in revenue is a challenging task. But to United Rentals' Wayland Hicks and U.S. Rentals' Bill Berry, the task is more akin to the developing of a friendship or a marriage. Just as any good relationship has its challenges, so does the union of two companies.

"United has a tremendous record in consolidation, and we have a strong track record in operations," says U.S. Rentals' CEO Berry, who will serve as president of United Rentals, if the deal goes through as expected next month. "In both companies, we have an entrepreneurial spirit that operates for the benefit of the shareholders."

"When you bring the two companies together, you have the best practices of both organizations and the two combined will be stronger than the individual," says vice chairman and chief operating officer Hicks. "The operational experience of U.S. Rentals' management team is so strong in so many areas. Where we might have to hire somebody, they've already got somebody on board."

Although the two companies will continue to operate separately until the deal is closed, committees are planning the juxtaposition of two distinct, but in man y ways complementary, corporate cultures. The companies need to consider how to proceed in a variety of areas.

Both Hicks and Berry say that geographic overlap is comparatively limited.

"If you look at the maps of our two companies, our locations are very complementary; there is very little overlap," says Hicks. "We've looked at locations and there are probably less than a handful that we might consider closing because they are so close together."

United was in the process of developing its structure with regional vice presidents responsible for operations in four areas. Hicks and Berry say that eventually the combined companies will have seven or eight regions. Both companies use preferred vendor systems, preferring to concentrate the purchase of equipment from vendors that provide national discounts. Although there is some difference in the vendors the two companies are involved with, many overlap.

U.S. Rentals has its own computer system, but will switch to United's. U.S. had also considered the Wynne system before developing its own. "Just like any other company that we acquire, there is a period of adjustment," says Hicks. "I've stood behind people at rental counters while they were trying to get comfortable with our newly installed management information system, and it's like a trip to purgatory, although the good news is that it's a short trip. But we need a common computer system, and we agree this is the best."

The acquisition will also help United in its efforts to drive down the age of its equipment fleet, since the U.S. fleet is comparatively newer.

U.S. and United will also have to standardize their compensation systems and are working on developing an integration schedule in a wide range of areas. Both Hicks and Berry say attrition will be relatively small, with 50 to 75 people across the two companies likely to face potential job loss, out of a total of about 5,000 people. Saying that United will provide stay-on bonuses to help work through the transition, Hicks adds that many of the people could be transferred to other departments as the company continues to expand. -MR