Statistics indicate that the mergers & acquisitions activity with the transportation and logistics industries been flat to slightly declining for the year 2019. The reasons for the small downward trend point to tariffs, downward pricing pressures and driver shortage.
A few other factors limiting the M&A transportation market is fuel expense and higher taxes in some states over others. The need to keep pace with technology carries an expense be it in safety, compliance, green initiatives as well as training or education. Consolidation within the transportation market continues as smaller firms, outside of specialty niches are challenged to compete and invest.
Here are some thoughts based on reviewing select articles and some 2019 statistics:
- Asset heavy transactions are valued approximately one-third less from an adjusted EBITDA multiple perspective
- Asset heavy transactions do offer significant downside protection given the liquidation value of the tractor and trailers assets
- Asset light transactions are viewed more favorably because the significant investment in tractor and trailers is eliminated
- Relationships and niches typically drive the premium in asset light transactions, making retention of key employees and customers very critical
- The transportation and logistics valuations have been good when taking into consideration newer equipment, solid and broad base of customers, latest technologies, driver age and retention, and a strong EBITDA.
- The direction businesses are going is to outsource movement of their products, so growth will continue in both markets of transportation and logistics
Please feel free to contact me if you have questions or would like to discuss the possibility of selling your Transportation and/or Logistics business.