Family company sells out to corporate acquirer Segra

Customers and clients should always be wary of large companies purchasing small businesses. Regardless of the PR, this type of transaction is hardly ever completed with the customer experience in mind. Instead, it is often based on the financial gain of the owner of the small business and the strengthening of the larger brand.

This month saw NorthState sell out to Segra. While the press release for the merger claims this will bring benefits for the customers and shareholders in the company, those affected have every reason to remain skeptical.

NorthState has been operating on the market for 124 years. The triad tech company is headquartered in High Point, North Carolina. It provides telephone services to both businesses and residential customers as well as web-hosting and optical fiber solutions. Currently, it ranks as one of the top 20 telecommunications companies in the US due to a high level of customer service.

The business was conceived by J.F. Hayden and was the first in the state to install the automatic-dial system. Still family owned, the business has built a solid reputation of trust with clients by offering a fantastic service at a great value. Could that be about to change?

Segra is one of the biggest independent fiber bandwidth businesses in the eastern US. The infrastructure network operated by the company stretches over 23,000 miles and it offers a plethora of solutions including dark fiber as well as IP and managed services.

The risk here is that Segra will swallow NorthState and corrupt the small business mindset that is focused around customer service. It’s possible that clients will see changes in the care and attention they received for services ordered because they will be handled by large teams rather than individual staff members. NorthState is operated by a 400 person team. Segra has more than double this number of operators working behind the scenes to deliver their services.

One might assume more employees leads to a greater level of care, however, this is often not the case. A smaller team will often result in a more personalized solution that provides greater benefits to individual clients and customers.

Possible Job Losses

It’s worth noting that the company is being purchased for $80 per share which equates to $240 million dollars. While this will provide tremendous benefits to the Tucker Family including the president of the company and major stockholder Royster Tucker III, it could spell trouble for current employees of the business. Many experts are suggesting that Segra has overpaid and the losses will need to be corrected somehow. The fear is that it could lead to the lay off of hundreds of local employees. This will certainly be the case if the family abandon management completely which does seem likely.

New Management

It is not expected that any of the members of the family that originally owned NorthState will stay on board. Indeed, they have been attempting to sell the company for more than 20 years but were unable to find the BIG buyer to pay a large enough price. Now that they have succeeded in completing the sale with the desired high purchase price, they are predicted to leave the company in the hands of Segra.

This again suggests a high potential for layoffs because the new management may be eager to bring in their own team. It’s also possible that a significant number of positions could be outsourced to other areas, taking jobs away from High Point.

It’s worth noting that Segra operates based on a sales goals approach for their internet services. Employees benefit from the number of sales they provide, regardless of whether the services offered will deliver any value to the clients. It is a clear sign that the high level of customer support NorthState is known for could be in jeopardy.

The merger was unanimously approved by NorthState’s complete Board of Directors. However, this is to be expected as the high-level shareholders are predicted to gain the greatest benefit from this deal. The business claims it is excited about the anticipated new level of technology and products that the merger will bring for customers and clients. Although this isn’t the first time a company had made potentially empty promises after being purchased by a large corporation and claiming a massive payday.

The transaction is expected to be completed in either the second or third quarter of 2020. However, it will need to meet customary regulatory approvals as well as a variety of other closing conditions.