Some people may grow weary sitting through a tough negotiation, but Sy Finkelstein gets giddy. “Negotiating makes my day,” says LKQ Corporation’s corporate director of real estate.
That’s a good thing. With more than 700 locations in the United States and Canada and still growing, there are numerous deals to make, and they’re far from simple. A Fortune 500 company, LKQ supplies dealerships and body shops with replacement parts, paint, related collision supplies, and runs a stable of salvage yards. It stays ahead in the field by being a one-stop shop. LKQ can get a client engines and transmissions, body paint, and any part imaginable, shipping the supplies on a fleet of more than 5,000 trucks from packed, strategically placed warehouses that minimize wait times.
“Customers can come to us instead of having to call 10 different places and wait for responses,” Finkelstein explains. “It’s all about availability and timeliness of delivery. We have to target markets, and we must be close enough to customers to supply hot runs (super-fast deliveries) if needed.”
Getting to the Table
Finkelstein manages all of LKQ’s US and Canadian properties, which involves fielding any questions related to the company’s real estate operations, handling leases, acquiring and selling properties, bidding and hiring contractors, paying bills, and identifying needs for consolidation. It’s all the negotiations and the complexities involved that keep him fired up. A savvy positioning at the table can save the company millions; overlooking a possible advantage can just as easily lose the same amount.
“I narrow down targets, then start my negotiations,” he explains. “It helps being Fortune 500, because the landlord knows they’re getting a tenant who doesn’t walk away from an obligation.”
Finkelstein depends a great deal on his field operations team in finding the right target properties. In fact, he considers himself a support system for them—not the other way around.
“They are my eyes and ears,” Finkelstein says. “They know where their customer base is and where their trucks run. The last thing they need is me handcuffing them and telling them where to be.”
Still, that doesn’t mean Finkelstein can’t help them out with making the final decision. Once he has done his due diligence with respect to tax breaks—which can vary from township to township and county to county—he will go back to his field ops people and explain the advantages of one choice or the other.
Let the Games Begin
Once the locations have been narrowed down, Finkelstein has to negotiate with governments as well as the landlords. His approach is thorough. He will study up on the history of a property and often appeal its valuation. He then negotiates clauses and concessions from the landlord, looking at deadlines and critical dates.
When investing in a property, LKQ aims high, borrowing in the millions. That means looking far into the future to minimize disruption to the business. In some cases, Finkelstein will cut a deal for a 10-year tax break so repayment won’t begin until the business is well-established. He works with field ops to crunch those numbers, then presents the figures to the executive team. On any given day, he’s fielding and responding to more than 100 e-mails, working through the intricacies of a deal.
“It’s a constantly moving target,” he says.
Finkelstein works closely with finance, giving them quarterly reports on lease obligations. When a lease is due, he checks with operations to see if they’re planning to stay or have a different need. When offices get old and need to be rehabbed, he’ll either renegotiate a lease with an existing landlord or find them a new location, which involves another round of negotiation.
He’s always looking for opportunities to save money. In one lease case, the market crashed and Finkelstein jumped on a deal, saving the company $5 million in rent. That’s real value the executive team can’t look away from, a goal Finkelstein always has in mind.
Finkelstein began his career as a CPA and has always enjoyed numbers, even when he didn’t enjoy how management tended to view accountants as easily replaceable. He began thinking of ways he could show the value he could bring to the organization. Having run a fleet of thousands of trucks, he had negotiated with scores of dealers with suppliers. When he noticed after an acquisition that nobody was looking at maximizing value in real estate, he realized he could apply his negotiating experience and number-crunching ability to that sector of the company’s investment. This ability to seize opportunities has allowed him to survive two major acquisitions in the last 20 years.
“A long time ago, I said to myself, ‘I’m never going to be taken for granted again,’” Finkelstein says. “I wanted to show that I could bring value to the table every day with every transaction. That’s how I got the thrill of seeing the fruits of my labor.”
Finkelstein’s labor has helped LKQ Corporation surge in growth and success, as it jumped into the Fortune 500 rankings. Its stock has gone up 1,640 percent since the company, founded in 1998, went public in 2003. LKQ has also branched out into Europe, Australia, and New Zealand.
“The industry is huge, and the sky’s the limit,” Finkelstein says. “We’re growing every day.”
With all the responsibilities he has taken on, and the need to be constantly alert, the work never ends. The activity is something he relishes. He says he has appreciated it in the past two years, during which he lost two family members to cancer: his wife and only sibling.
“I thank God for my job and my kids,” he says. “It’s kept me focused and productive and did not leave time for a pity party. Life can be harsh sometimes. But when you’re driven and have goals in mind, you don’t fall down.”
“Congratulations Sy and LKQ Corporation on becoming a best-in-class operator in the automotive industry. ElmTree is proud to be your partner and excited to further develop ElmTree and LKQ’s relationship as we embark on future projects together. We look forward to your continued success.” —Jim Koman, Managing Principal, ElmTree Funds