A Fly on the Wall at EFT CEO Roundtable on M&A

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Published November 2, 2017

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Eye for Transport assembled the top 3PLs in the industry for a roundtable discussion on the current and future state of M&A.  The highlights from the roundtable include:

  1. The 3PL market for M&A is a seller’s market.  M&A strategy for top 3PLs is centered around building density in regions or tuck-in acquisitions. Financial buyers are more active than strategic buyers.  Financial buyers are searching for companies that serve a specific niche such as cold-chain or medical.  
  2. Tuck-in deals are better opportunities for strategic buyers. 
  3. The final mile has not been a focus for acquisitions, although it is on buyers’ radar because of the increase in eCommerce fulfillment. 
  4. One area of interest for 3PLs, is the non-asset transportation service providers serving the LTL market.  As the market for eCommerce continues to grow, there is an increased demand for LTL transportation services.  Further impacting this market is the electronic logging device (ELD) requirement and its effect on truck availability and transportation rates.
  5. A main concern is the decreasing number of drivers in the market.  As with all supply and demand, when the supply goes down the prices go up.  Most believe rates will increase.  The full impact will occur next summer.  Rates are always high because of the demand for shipments in agriculture and construction.  Tompkins believes for select lanes, the rates will double what they are now.  The rates will be especially high for loads going to less populated areas, where backhauls are more difficult to find.  Routes between 500 and 800 miles will also rise.  In the past when a driver could “go the extra mile” and deliver the load in one day, it will now take two.
  6. Fuel was last key M&A takeaway. Buyers want to insulate themselves from fuel surcharges; if the fuel surcharge is a big source of earnings, it is a red flag.  Typically, when buying a company, they will look to pay 4-5 times EBITDA. 

For further information on Tompkins’ M&A best practices, please visit our website: Mergers & Acquisitions Due Diligence

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I understand that Tompkins will only use this information to contact me about business opportunities. By completing this form I am confirming that I have read and accept the Privacy Policy.