InSight

Exit and Growth Strategies for Middle Market Businesses

Archive for the ‘Transport/Logistics’ Category

Transportation and Logistics M&A News

By Peter Heydenrych | Jul 30, 2015

Warehouse of ProductsThe U.S. economy remains strong, which bodes well for activity in the Transportation and Logistics sector, however, recent turmoil in Greece and further debt obligations faced by Puerto Rico may lead buyers to act more cautious in the second half of the year. Still, all that cash on corporate balance sheets combined with near-record levels of “dry powder” on the private equity side has to be put to work.

US freight forwarding companies continue to increase their investments in Asian countries to benefit from growing US-Asia trade.  By 2030 China is expected to surpass Mexico to become the second-largest US export trading partner, and South Korea is projected to become the fourth-largest market for US exports, according to a report released by HSBC and Oxford Economics in May 2015. Although Canada is expected to remain the top market for US exports, China, India, Malaysia, and Vietnam are forecast to be the fastest-growing markets for US goods, with annual growth of about 9%.

Consolidation has also had a strong effect on freight forwarding.  As non-asset freight forwarders and third-party logistics firms consolidate and expand their service portfolios, smaller players are finding it more difficult than ever to compete. The growth of Internet-based exchanges that can serve small customers puts additional pressure on small, independent brokers. E-commerce growth and expansion of intermodal and LTL trucking transportation are fueling acquisitions among non-asset freight brokers and logistics firms. An example includes the merger of Coyote Logistics and Access America Transport in March 2014, which formed a multimodal company with more than $2 billion in annual revenue.

Posted by Doug Nix.

Read the Entire Transport, Logistics and Supply Chain 3rd Quarter Newsletter Here

 


M&A News in the Transportation Industry

By Peter Heydenrych | Jul 09, 2015

With fuel prices remaining well below their highs many transportation and logistics companies are posting inflated EBITDA results driving up top-line valuations even though multiples for middle market companies remained fixed in the 4x to 6x range. This factor has spurred a variety of would-be sellers to seriously consider an exit before an inevitable rise in fuel prices occurs. From a buyer’s prospective the sector’s historically fragmented composition continues to post a solid landscape for a potential roll-up strategy.

Trucking – US trucking companies are struggling to add enough drivers as the economy improves and freight volumes increase. The employment turnover rate at large truckload fleets was 96 percent in the fourth quarter of 2014, according to the American Trucking Association. Smaller carriers (those with less than $30 million in annual revenue), which typically enjoy much lower turnover, experienced a rate of 95 percent during the same period. High turnover is expected to continue in both segments as they draw from an inadequate pool of qualified workers. The American Trucking Association estimates the current shortage to be between 35,000 and 40,000 drivers. With plummeting crude oil prices driving diesel prices lower, operating costs at trucking companies are falling dramatically. Retail diesel prices in the US, which averaged $3.82 in 2014, hit a four-year low at the end of the year. Prices are expected to average only $3.07 per gallon in 2015, which could result in diesel surcharge savings of as much as $24 billion, according to Bloomberg.

Posted by Doug Nix.

Read the Entire Transport, Logistics and Supply Chain 2nd Quarter Newsletter Here


Transportation and Logistics Sector M&A News

By Peter Heydenrych | Apr 29, 2015

LogisticsM&A activity in the transportation and logistics sector was driven by an increase in trucking deals as larger companies looked to increase market share. Consolidation is being driven by overcapacity in shipping as larger players attempt to reduce competition and create more efficient economies of scale. Looking ahead to 2015, a decline in fuel costs could result in improved profitability and spark increased M&A activity.

According to First Research, an industry research organization, with plummeting crude oil prices driving diesel prices lower, operating costs at trucking companies are falling dramatically. Retail diesel prices in the US, which averaged $3.82 in 2014, hit a four-year low at the end of the year. Prices are expected to average only $3.07 per gallon in 2015, which could result in diesel surcharge savings of as much as $24 billion, according to Bloomberg. Reducing surcharges should free up trucking companies to raise shipping rates, which would help them cover rising salary and health care costs.

High levels of warehouse absorption in the US indicate an increased demand for warehouse space, driven by growing e-commerce activities. More than 160 of the 210 largest US warehouse markets showed positive net absorption – an increase in the amount of warehouse space occupied – in 2013 versus 2012. Overall in those markets, 162.6 million square feet of warehouse space was occupied in 2013, an increase of nearly 40 percent from 2012, according to CoStar. Much of the demand for warehouse space is directly related to e-commerce, a sector that’s growing globally by about 20 percent annually.

Posted by Doug Nix.

Read the Entire Transport, Logistics and Supply Chain 1st Quarter Newsletter Here


M&A Trends in the Transportation Industry

By Peter Heydenrych | Jan 16, 2015

Transport and LogisticsMultiple sectors of the transportation industry remain on an upward trajectory. According to a report from industry research group First Research, the US transportation services market is forecast to grow at an annual compounded rate of 5 percent between 2014 and 2018. US railroads, trucking, and water transportation services, all major indicators for freight forwarding, is forecast to grow at an annual compounded rate of 5 percent between 2014 and 2018. US warehousing and storage services is forecast to grow at an annual compounded rate of 4 percent between 2014 and 2018.

Read the Entire Transport, Logistics and Supply Chain 4th Quarter Newsletter Here

Posted by Doug Nix.


Q3 Transport, Logistics and Supply Chain M&A Update

By Kim Levin | Oct 31, 2014

TLIPG-Rail TunnelM&A activity in the Supply Chain and Logistics sector for North American based target companies in Q2 2014 included 44 closed deals according to data provided by S&P Capital IQ. The average deal value was $74 million with an average enterprise value to revenue multiple of .79.

Overall valuations are modest for several reasons. First, transportation deals are cyclical and have already passed the high peak after the low from the recession. Another contributing factor is the horizontal consolidation of smaller trucking companies as opposed to transactions involving more costly modes like airlines and rail.

Read the Entire Transport, Logistics and Supply Chain 3rd Quarter Newsletter Here


Q2 Transport, Logistics & Supply Chain M&A Update

By Kim Levin | Jul 03, 2014

TLIPG-Warehouse of ProductsM&A activity in the Supply Chain and Logistics sector for North American based target companies in Q1 2014 included 72 closed deals according to data provided by S&P Capital IQ. The average deal value was $64 million with an average enterprise value to revenue multiple of .67. The deal activity has primarily been driven by large acquirers gobbling up smaller local outfits with the hopes of enhancing market share at relatively modest multiples. According to a report from global consulting firm PriceWaterhouseCoopers, this sentiment has set up smaller trucking and logistics companies for a lively M&A market over the next 12 months.

Read the Entire Transport, Logistics & Supply Chain 2nd Quarter Newsletter Here


Transport, Logistics and Supply Chain Q1 M&A Update

By Kim Levin | Apr 25, 2014

TruckM&A activity in the North American Transportation and Logistics sector for Q4 2013 through February 24, 2014 included 96 deals announced or closed according to data provided by S&P Capital IQ. According to a report from international consulting firm PriceWaterhouseCoopers, deal activity was strong to close 2013 with infrastructure targets (asset heavy airport and port assets) accounting for the majority of mega transactions. According to the PWC report, with US airline consolidation mostly complete, areas ripe for consolidation include trucking and logistics. Another sub-sector projecting an increase in activity is shipping, though anti-competition laws may lead to more partnerships and alliances than deals.

Read the Entire Transport, Logistics & Supply Chain 1st Quarter Newsletter Here


Transport, Logistics and Supply Chain Q4 M&A Update

By Kim Levin | Feb 14, 2014

TLIPG-Train into TunnelM&A activity in the North American transportation and logistics sector in the third quarter of 2013 was active with 62 deals announced or closed in the period according to data provided by S&P Capital IQ. According to a report from international consulting firm PricewaterhouseCoopers (PwC), deal making activity in North America and Europe was somewhat tempered compared to other parts of the world due to strategic companies largely remaining idle, or on the sidelines. Moreover, the respective economic challenges in each region are impacting activity, but the near-term outlook for North America is bright due to a recent upswing in manufacturing activity.

Read the Entire Transport, Logistics and Supply Chain 4th Quarter Newsletter Here


Transport, Logistics and Supply Chain M&A Update

By Kim Levin | Dec 06, 2013

TruckAccording to data collected by Ernst & Young, there has been a consistent trend throughout global M&A over the past three years associated with declining deal conversion rates and a longer average time to completion. Although these trends do not seem favorable, they may be attributed to an increase in pending bids caused by a more optimistic lending environment. Since September 2010, there have been 82 transactions under $1 billion in the transportation & logistics (“T&L”) industry within North America, totaling almost $6.5 billion in aggregate value.

Read the Entire 3rd Quarter Transport, Logisitics and Supply Chain Newsletter


CFA Advises Rockey Companies

By Roy Graham | Jun 14, 2008

rockey

Case Study

Situation: John Rockey started his company in 1983 with a single truck. Twenty-four years later, he had grown it into a highly successful transcontinental provider of logistics services to the United States military. Rockey realized however, that he was on the verge of losing control as the company continued to grow. Believing that he had advanced the company as far as he could, he decided he would have to sell. A financial services provider saw that he needed experienced guidance and introduced him to CFA.

Solution: Upon understanding Rockey’s true desires, CFA outlined a recapitalization process which allowed him to extract wealth from his company, while still retaining an attractive ownership position and active involvement in his company. CFA identified a strong investment group willing to invest and commit to active management in the company. With the needed expertise to institute sophisticated systems and controls while bringing new resources and strategic insight, Rockey’s new partners form the foundation for future growth of even greater opportunities.