This agricultural equipment juggernaut is on an acquisitions spree after teaming up with private equity investors

By Verne Harnish

Parallel Ag is a distributor of new and used agricultural equipment. The 230-person company, headquartered in Chickasha, Oklahoma, is the result of the August 2022 acquisition of Livingston Machinery by Ag Solutions Group, a deal facilitated by private equity. The goal was to create a vehicle for the acquisition of other dealerships in the space. 

“This company is a platform company to buy and grow,” says Shawn Skaggs, president and CEO, who had been leading Livingston Machinery. “I have no doubt we’ll run into some buy-and-fixes. A lot of our planned acquisitions are going to be small dealerships with a single store. Some have been family owned for 100-plus years. For them it’s going to feel like buy-and-enhance at the local level. We’ve got a fully developed executive team and support teams, and can offer resources they’ve never had before.” 

The combination of the two companies, which became official in January, brought together 13 stores across the Midwest under one brand, building their combined parts inventory to $15 million. 

Ag Solutions Group, founded in 2004 and headquartered in Marshall, Mo., had built a name for itself in the Upper Midwest because of its deep knowledge of fertilizer and chemical application equipment. It was known for selling brands such as Apache sprayers, Kinze planters, Claas hay tools, Kubota tractors and Polaris outdoor power products from locations in Iowa, Nebraska, Minnesota and Missouri.

Livingston Machinery, founded in 1987 and headquartered in Chickasha, Okla., had built a strong presence in the Southern Plains, with locations in Oklahoma, Texas and Kansas, selling AGCO products such as hay equipment and high-horsepower tractors. Skaggs started his career there as a salesperson.

The companies have used the Scaling Up platform to merge their two cultures successfully, under the guidance of Scaling Up certified coach Stacy Eads. Here is a look at their path to success. 

Solving cash constraints

Skaggs began looking into the possibility of selling Livingston Machinery when it was facing cash constraints that were slowing its growth. The company, owned by employees through an Employee Stock Ownership Plan (ESOP) from 2009 to 2021, had done three acquisitions, paying cash for two and financing the other through a local bank, and had opened a brand-new location. However, one of the acquisitions, a store, turned out to be troubled, and they closed it. That coincided with a cash flow crunch from 2016-2017.

“It kept us from being able to grow the way we wanted,” says Skaggs. “We decided to find a broker and test the market to see if we could find partners to buy the business from the ESOP and then take advantage of the changes in our industry to consolidate other dealers and grow,” says Skaggs.

Finding financing partners

Skaggs found the partners he was seeking in two private equity firms in Des Moines: Summit Equity Group and Midwest Growth Partners. Skaggs rolled all of his ESOP proceeds and savings into a deal that would combine Livingston Machinery with Ag Solutions Group, which was owned by Summit Equity Group. Livingston Machinery and Summit Equity Group eventually brought in North Creek Mezzanine as both a lender and equity partner on the deal.

Livingston Machinery and Ag Solutions Group merged and rebranded as Parallel AG in January, bringing together Ag Solutions Group’s seven locations and Livingston Machinery’s six locations. 

Building a shared culture 

Skaggs and his team have used the Scaling Up platform to grow since Skaggs read Scaling Up in 2014. They retained Eads last year to help them build a common culture, having her facilitate annual meetings and coach them on goal-setting.

“Stacy has played a big role in helping facilitate this, but we basically had to create a new shared culture together from the ground up,” says Skaggs. “There are facets of both old companies’ cultures in the mix, but we all had to have a hand in creating who are going to be going forward.”

 Identifying new targets

To find targets who are open to being acquired, Skaggs and his team network with manufacturers and manufacturers reps. “Sometimes targets come to us,” he says. “They know we are in the market.”

ParallelAg is now in the process of sending out letters and brochures to targets, to let them know about the company and what it does. 

Fortunately, the company has a track record of success. One dealership that Livingston Machinery acquired grew revenue to 5.48x what it was at the time of the acquisition, with the owner staying on. 

In another case, Livingston Machinery bought out the agricultural division of the CAT dealer for Oklahoma and West Texas. “In that case, they were failing, and we basically bought the assets at a discount, hired a few of their people and then grew it ourselves over the next few years into a profitable and fast-growing business,” Skaggs says. 

Not all acquisitions have worked out. The combined company is currently selling one dealership it purchased to a neighboring business because it did not fit the company’s model, reducing the number of stores to 12. 

However, Skaggs is optimistic now that he has the systems in place to scale up. His team is looking at 25 acquisition targets currently, with the goal of having 25 locations in the next few years. 

 “The next challenge will be if we acquire another large company with multiple locations,” he says. “We will already have our newly established culture and have to bring those new acquisitions into that culture.  It will be a fun and interesting challenge but we’re looking forward to it.”