Follow us on Twitter!
Blog Header Logo
DG&A's Transportation Consulting Blog
Subscribe to this list via RSS Blog posts tagged in Doug Davis

At a recent Driving for Profit Seminar in Toronto, Lou Smyrlis, Editorial Director of Canadian Transportation & Logistics Magazine, led two trucking company investment advisors, Doug Nix, Vice Chairman of Corporate Finance Associates and Doug Davis, Independent Director, Pro-Trans Ventures Inc. through a discussion of how to buy and sell trucking companies in 2012.  Here is what they had to say.

From a buyer perspective, they encouraged companies to be proactive in seeking out prospective acquisition candidates.  Since so much about buying is timing, it always important to plant the seed and remain in contact.  While a trucking company’s leaders may not be ready to sell their enterprise in the second quarter of 2012, it is at least important as a purchaser to express your interest. One should also keep in mind that the purchase process itself can take six to nine months or more complete.

The buyer should carefully think through some key questions such as “why” make this purchase, what are the underlying business risks of a potential acquisition, do they have the investment advisor team in place to guide them through the process and do they have the “bandwidth” (management team) to manage the acquisition? In other words, can the company manage its current base of business while it is trying to assimilate new customers, new employees and possibly fit two cultures together?

The two advisors mentioned that they use a valuation multiple for an asset-based business of 3.75 X normalized EBITDA.  The word “normalized” is an important concept since this refers to what the earnings will look like when certain expenses or withdrawals that are taken out of the company by the current owners are removed from the income statement to better reflect what the business will look like on a going forward basis.

The purchaser must look at a number of variables in determining how to pay for the company.  The advisers related it to buying a home. The purchaser looks at what they can make in terms of a down payment and the level of mortgage they wish to carry.   Similarly, when buying a trucking company, one needs to consider the financial structure of their offer.  This involves an evaluation of cask payment, business loan and earn-out.  The latter is a common term that refers to principle of paying the seller part of the purchase price from monies earned by the business over a period of years.  If the sellers remain with the business after implementation and help maintain the income flow, they are rewarded with a business retention bonus for their efforts. 

...
Hits: 46228
0
Continue reading 0 Comments

Two experts in trucking company acquisitions predicted this week that we are in store for an upswing in industry consolidation in 2012.  This was one of the highlights of the Driving for Profit event that was held in Mississauga this past week.   Lou Smyrlis, Editorial Director of Canadian Transportation & Logistics interviewed two gentlemen who play significant roles in these types of activities, Doug Nix, Vice Chairman of Corporate Finance Associates and Doug Davis, Independent Director, Pro-Trans Ventures Inc.

In the initial stages of the interview, Lou asked these gentlemen about why we did not see more consolidation during the recent recession. The key takeaway from this discussion was that during this difficult period, trucking companies hunkered down into a “survival mode.”   The recession created devaluations of trucking company businesses.  Most truckers decided to tough it out until valuations improved.  Lenders, who saw trucking as a core industry, chose to support the industry until economic conditions improved.

The two investment advisors now believe that M & A activity will now increase.  They base this conclusion on the fact that after a 3 year hiatus, there is a pent-up demand.  There is a “ton of cash” waiting to be invested.  Balance sheets are healthy again.  During the recession, many trucking companies right-sized their businesses.  Investors will now see more efficient, stable businesses. 

Demographics will also play a part as many baby boomers who are seeking an exit strategy are three years older and their timetable for leaving the industry is now shorter.  We now have willing buyers, sellers and bankers.  While the two gentlemen do not predict a “feeding frenzy,” they do expect to see a doubling in the volume of trucking company acquisitions as compared to what we saw the last three years.

Lou then asked these advisors about the types of deals we are likely to see.  They expressed the view that there will likely be more “bolt-ons” where companies seek to expand a core business.  These types of deals allow companies to “improve overheads, bring margins into line” and “reduce dependence: on certain “key customers.”  When asked a question about whether we can expect to see a blockbuster deal like the Yellow-Roadway merger in the U.S., Doug Nix made the observation that the money would be there if the right plans with the right people are put in place.  However he opined that he does not think Canadians have the “chutzpah” to make a deal of this nature.

...
Hits: 21676
0
Continue reading 0 Comments

Most Recent Posts

Search


Tag Cloud

Social Media in Transportation Sales Training shipper-carrier roundtable Surety bond Wal-Mart Failure hiring process NCC Amazon dimensional pricing peak season Doug Nix Comey Map-21 Management Masters in Logistics customer engagement Blogging online shopping bulk shipping Life Lessons derailments Twitter Doug Davis Swift rail safety 3PLTL Truckload Retail transportation truck driver coaching economic forecasts for 2012 economy Freight Carriers Association of Canada CITA Shipper Pulse Survey Freight Rates selling trucking companies freight transportation conference carrier conference CN Rail autonomous vehicles Cleveland Cavaliers driver shortages Canadian freight market small business Donald Trump Global Transportation Hub last mile delivery risk management Derek Singleton transportation newspaper Business skills freight bid Stephen Harper Trade Vision NMFC Reshoring Dedicated Trucking 2014 freight volumes Retail CP Rail LCV's ShipMax Transportation Buying Trends Survey Emergent Strategy Rotman School of Business Keystone Pipeline Accessorial Charges LTL Canada Broker supply chain management consumer centric robotics Regina pipelines dynamic pricing Packaging TransForce Transcom Fleet Leasing LinkedIn Transloading Load Boards US Manufacturing Deferred Packaging Transportation service Search engine optimization US Economy New York Times University of Tennessee energy efficiency employee termination solutions provider Colilers International Canada-U.S. trade agreement YRC Crisis management EBOR freight payment Microsoft MBA future of freight industry US Housing Market home delivery Celadon home delibery freight agreements Finance and Transportation business start-up Sales Management broker bonds freight rate increases Omni Channel Bobby Harris Grocery freight costs Politics Facebook 360ideaspace Loblaw Education APL capacity shortage 2013 Economic Forecast President Obama tanker cars Job satisfaction mentoring Canada's global strategy Dan Goodwill buying trucking companies Global experience Railway Association of Canada Muhammad Ali Canadian truckers Scott Monty broker security Career Advice freight audit Toronto ProMiles Distribution Load broker Associates Freight contracts UP Leadership Canadian Transportation & Logistics fuel surcharge financial management Freight Management routing guide Sales Otto Conway Freight Shuttle System shipper-carrier collaboration Hudsons Bay Company transportation audit Warehousing CSA freight RFP Training New Hires CRM drones KCS Werner Climate Change FMS freight transportation in 2011 FCA FMCSA Transport Capital Partners (TCP) automation intermodal network optimization Business Strategy Trucking marketing transportation news capacity shortages Right Shoring NS BNSF BlueGrace Logistics freight transportation IANA Adrian Gonzalez $75000 bond Success failure entrepreneur Rail FuelQuest Schneider Logistics e-commerce truck drivers Crude Oil by Rail the future of transportation Driving for Profit US Election TMS Freight Recession RFP FCPC natural disasters freight broker Canadian economy professional drivers Success CN shipping wine cheap oil Driver Shortage Business Transformation Strategy Whole Foods TMP Worldwide 2014 freight forecast Freight Capacity 2012 Transportation Business Strategies. Jugaad freight forwarders Inbound Transportation Consulting freight cost savings JB Hunt US Auto Sales Harper Davos speech CSA scores Outsourcing Sales Carriers driver Tracy Matura Entrepreneur Freight Yield Improvement Freight Matching Dedicated Contract Carriage Social Media driverless David Tuttle Trump Rate per Mile 2015 Economic Forecast trade Training freight payment freight audit Fire Phone MPG CSX NAFTA Software Advice 2014 economic forecast Transplace Infrastructure trucking company acquisitions Horizontal Supply Chain Collaboration Canada U.S. trade shipping Shipper Spanx Ferromex shipper-carrier contracts Transportation 3PL USA Truck

Blog Archives