Demand for transportation services is at an all-time high, and market demand shows no signs of slowing down in the near term. To meet this demand, trucking and logistics companies are growing via acquisition and by infusing growth capital to meet their goals for recruiting, retention, operations and expansion.
Whether you are planning to expand your trucking and logistics company and need access to capital to achieve your goals, or you are contemplating the potential sale of your company, the factors considered by acquirors and financial partners are similar. These factors, which are referred to as value drivers, will be considered by financial partners including commercial banks, private equity firms and family office investors. Strategic acquirors, who are the most common buyer type for companies in the trucking industry so far in 2021, will also consider these factors during their evaluation of potential targets.
No matter your planning horizon, understanding these value drivers is crucial to successfully raising capital or finding an acquisition partner. The key value drivers for transportation companies include:
- Strong, stable and consistent financials
- Diversified revenue streams and services offered
- Long-standing customer relationships
- A diversified customer base with low customer concentration
- A consistent track record of high customer service levels and on-time delivery
- A history of good safety records throughout the company
- A diversified commodity/load mix of freight hauled
- An emphasis on company culture which impacts both drivers and support staff
- A well-developed, focused and effective driver recruitment and retention plan
- An updated fleet and comprehensive fleet analysis, including a breakdown between company-owned equipment and owner-operators, the number of power units, trailers and ancillary equipment, including age, miles and condition
- A comprehensive, anonymous review of driver information, including years of experience, safety records and whether they are company employees or owner-operators
- A well-thought-out geographic footprint and number of terminals (or established plans to fill in the blanks if looking to expand)
- A well-established, committed management team interested in remaining with the company after a potential sale or capital raise
- Utilization of available and current technologies throughout the organization
- Minimal capital expenditures needed for required maintenance and rolling fleet turnover
While these are not the only factors a financial partner or acquiror will consider, our experience demonstrates that understanding and addressing these value drivers will best position a company to attract the type of attention and interest you are seeking in the market.
Interested in exploring the sale of your trucking company? Learn more about the factors impacting M&A activity among transportation companies by downloading Bridgepoint’s complimentary Transportation M&A Update here, published quarterly.
Want to understand the types of funding available to privately-owned companies? Download our latest guide, Beyond the Bank: A Guide to Funding Sources and Types of Capital for Company Owners here.
To schedule a complimentary consultation to discuss your M&A or capital needs, contact Bridgepoint’s Transportation Sector Lead, Wm. Lee Merritt, here.