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

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: 46000
0
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: 21648
0
Continue reading 0 Comments

Most Recent Posts

Search


Tag Cloud

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

Blog Archives