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

If your trucking company hasn’t been purchased or doesn’t get purchased by TransForce, will it be in business in five years?  That is the question that came up in a recent discussion with a long time industry colleague.  The response I received was that he didn’t think his company would survive.  I was a bit surprised by the response and asked him for an explanation.  This led to an interesting discussion on what it is going to take to make it in the trucking industry in 2014 and beyond.

We both agreed that while the trucking industry has changed in some ways over the past decade (e.g. more use of technology, better cost controls after the Great Recession, LNG vehicles, greater use of 3PLs as customers), the industry is not that much different from ten years ago.  The slow economic turnaround since 2008 has created a challenging environment and there is little reason to expect a major improvement in the short term.  Rate increases are hard to come by, even with a tight driver situation.  Even more of a concern is the lack of innovation in the industry and the threat that such changes could wreak on so many complacent companies.

The warning signs are there.  As a Canadian, you don’t have to look much further than Nortel and Blackberry to see what can happen to industry leaders that were not able to keep up with changing consumer needs and quality competitors.  At the same time, one can observe what companies such as Amazon and Apple have been able to do to change the paradigm of some long established industries. 

Some of the large trucking industry players are making investments in technology and people.  They are integrating back offices and focusing on achieving economies of scale.  They are thoughtfully expanding their service portfolios and geographic footprints. 

Some of the small players are offering solutions that are very tailored to certain industry verticals and geographic areas.  Companies that are focused on same day delivery, refrigerated intermodal service, pooled LTL service, energy distribution and other emerging capabilities are creating a space for themselves in the industry.

Hits: 9648
Continue reading 0 Comments

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: 46681
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: 21705
Continue reading 0 Comments

Most Recent Posts


Tag Cloud

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

Blog Archives