Timing and confidentiality are both very important when selling a company, especially in the trucking industry. When the choice has been made to sell or liquidate, it can be an emotional process, especially if the company has been owned and operated by the same individual for many years. When an owner does decide to sell, it is important to choose an advisory firm that has vast industry experience and understands the process. One of our clients made the difficult to decision to sell, and approached us with very specific objectives in mind. The client has a tight time frame and was looking to retire in the next few years. Since the company was a second –generation, family-owned business we needed to find a buyer who would respect the seller’s wishes and leave the company intact.
With our client’s specific objectives in mind, we did not want to waste any time pursuing buyers that did not meet the seller’s qualifications. Instead, we used a targeted approach and only brought forth one potential buyer, a reputable well-known carrier whose objectives matched those of the seller. The experience and tenure of our partners contributed to a smooth, successful, and timely transaction.
In addition to meeting the timeframe and financial objectives of our client, the transaction also allowed the seller to stay on with the new buyer for three years. The buyer not only made a new acquisition that expanded his market, but also benefitted from the valuable knowledge of the former owner. Our client was pleased knowing that his hard work and family’s legacy were honored, and that he was able to meet his goals for retirement.
Acquisitions can be an effective way for carriers to add customers, drivers and operational capability, however, the challenge is to complete a merger without eroding these benefits. When a merger causes changes that are too great, the final result is often disappointing. A carrier that has a “bargain price” may have customers and traffic lanes that do not fit a buyer’s operations, and can then become a very expensive acquisition. If done correctly, however, a carrier can gain valuable new relationships, increase customer service opportunities and lower overall costs, therein building long-term value. Such was the case with one of our clients, a mid-sized temperature-controlled carrier seeking to extend their service territory. The carrier had the financial strength and borrowing capability for an acquisition.
TCP worked with the carrier to understand the location, size, operations, and preferred types of customers that would make a good acquisition. We also worked to understand the pricing and deal structure our client was comfortable offering, and went to work seeking the right candidates. Potential candidates were screened to see if they would fit operationally as well as willingness to sell. TCP finds the best acquisition candidates are often not companies who are “on the market”.
Over a period of several months we introduced our client to a few select candidates. When the right fit was found, TCP assisted in the discussion and negotiation of terms. In the end, both parties were more-than-satisfied with the price and terms. Our client gained new operations capabilities that fit well with his existing business. Since then, revenue has grown with key customers.
After a period of transition or change in leadership, a detailed business valuation or assessment is an excellent way for a trucking company to determine its future profitability and ability to effectively operate in future market conditions. During a time of transition or change in leadership, truckload carriers can often become vulnerable. Such was the case with one of TCP’s clients, a truckload carrier operated exclusively by one family for three generations. When the majority shareholder passed away, TCP was engaged to perform an assessment of the company, its value, state of the management, and the viability of the company in the future.
As an advisory firm with a combined 225 years in the trucking industry, TCP is familiar with current practices and metrics in the industry and can objectively and confidentially provide strategic recommendations to a carrier to improve operations and profitability. TCP was initially engaged to perform a strategic assessment and valuation of the company, including an evaluation of the management team and the viability of the company in the future. After completing the assessment, TCP was further engaged for 12 months to make operational changes including restructuring operations, establishing benchmark metrics, advising and training members of the family, and hiring outside management.
While other companies might have pushed the company to sell or exit the business, TCP assessed the situation objectively and provided advice so that our client was equipped with the proper tools to create a sustainable company for the next generation. Following TCP’s strategic advice, our client has grown profitability, upgraded their fleet, brought in strong management, and diversified the company and commodity mix to be more viable long-term. The truckload carrier moved from a company that was losing money and subsidized by the owners, to a viable entity that was profitable.
