The general consensus of the interview was that the increased rate of trucking and logistics acquisitions market will most likely continue in 2015, holding to patterns seen in the last few years.
Phoenix, AZ (PRWEB) March 19, 2015
In an interview last week with Transport Topics, industry leaders and experts offered their expectations on the transportation and trucking industry’s trend of acquisitions in 2015. Andy Ahern, founder and CEO of the transportation consulting company Ahern & Associates, was one of the experts to share key insight on the subject.
The general consensus of the interview was that the increased rate of trucking and logistics acquisitions market will most likely continue in 2015, holding to patterns seen in the last few years. What is driving the force are continued rising economic expectations, cash available to pay for deals, and the need of fleets to secure capacity.
“There is a lot of activity,” Andy Ahern told Transport Topics. “I don’t know if it will reach everybody’s expectations. We thought the market was going to flatten out in ’15, however, the combination of an aging driver corps and restrictive federal regulations are forcing fleets to look outside organic growth to get capacity.”
Other analysts interviewed agreed with Ahern, stating that 2014 was very active, and they expect to see more of the same in 2015. “Asset-based fleets are buying market share and capacity, with the goal of retaining drivers at a time of a chronic shortage.”
As reported by Transport Topics, Standard & Poor’s Inc.’s Capital IQ provided a report showing 86 trucking and logistics acquisitions in 2014, very near the 2007 total of 90. CRST International Inc. recently announced a recent acquisition with the purchase of Pegasus Transportation Inc. “We are always in search of adding companies to our portfolio that offer services which allow us to expand our capabilities,” said CEO Dave Rusch.
Other companies have already completed transactions early in 2015, including in the last few weeks, two Japanese companies announcing $6.2 billion of international logistics acquisitions, according to Transport Topics.
While strategic buyers look to expand businesses already in existence, financial buyers set a goal of maximizing profits. A key factor in the valuation of acquisitions is the confidence the buyer has that it will be able to keep the seller’s drivers. “Nobody has drivers,” explained Ahern. Jason Seidl, an analyst at Cowen & Co., agrees. “The M&A market is thriving because it’s still hard to get drivers, and acquisitions are the easiest way for a carrier to grow.”
While some experts lean toward the liberal side when it comes to transaction value, Ahern remains on the more conservative end. As opposed to the views of some, who gauge the typical value of non-asset-based acquisitions at a multiple of 9 to 11 times the seller’s earnings, Ahern states that typical asset-based values run under 5 times EBITDA and no more than 7 times for non-asset. He also notes changes in practices that affect M&A activity.
“We are seeing a lot of second- and third-generation people who are staying in the business or coming back,” he says. “Recently, some of those who founded fleets after industry deregulation in 1980 have chosen to sell because younger family members weren’t interested, and other company founders are transferring their firms to employees instead of selling them. C.R. England serves as an example of family management succession.”
For more information on Ahern & Associates, please call 602-242-1030 or visit http://www.ahern-ltd.com.
About Ahern & Associates, Ltd.
Ahern and Associates is North America’s leading trucking and transportation management consulting firm. The skilled consultants at Ahern and Associates specialize in mergers and acquisitions of trucking and logistics companies as well as the restructuring and evaluation of existing carriers that seek to increase operating efficiency and improve profitability. Since 1987, Ahern and Associates has aided hundreds of buyers in the acquisition of trucking and logistics companies throughout the U.S. and Canada as well as assisting many transportation and logistics companies in reducing their overall operating costs and increasing their profitability.
For more information, please call 602-242-1030 or visit http://www.ahern-ltd.com.