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

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: 47113
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: 21730
0
Continue reading 0 Comments

Most Recent Posts

Search


Tag Cloud

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

Blog Archives