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

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: 46417
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: 21688
0
Continue reading 0 Comments

Most Recent Posts

Search


Tag Cloud

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

Blog Archives