Supply Chain 2017: Mergers and Acquisitions Are Here to Stay

December 13 / US
Supply Chain 2017: Mergers and Acquisitions Are Here to Stay

By: Frank McGuigan, Chief Executive Officer, Transplace

The transportation and logistics market has seen a heightened level of M&A activity in recent years – and it doesn’t show any signs of slowing down. According to a recent report, transportation and logistics M&A activity was robust in 2017; and in Q3 of this year, the sector reported 71 transactions for $43.3 billion.[1]

But what’s causing this continued market shake-up, and what can an M&A event mean for your organization? A major driver for recent additional M&A activity is the desire (and in some cases the need) for those in the transportation and logistics space to better serve their customers. Whether retailers serving consumers, 3PLs serving shippers or carriers serving shippers, this ongoing need stems from changing consumer demands and expectations.

The demand for more product availability, faster delivery and other value-added services has put greater pressure on retailers, who then put greater demands upstream on their suppliers, which impacts the service requirements of carriers and logistics providers. As a result, organizations are recognizing that they must evolve in order to meet the changing needs of their customers and remain competitive. M&A can be a highly effective way to achieve this.

Scale and Network: A Powerful Force When Combined

Companies looking to make an acquisition can benefit from expanding a capability, geography, scale or vertical market they currently already serve. On the other side, when a larger enterprise acquires a smaller transportation company, the smaller organization can immediately benefit from greater scale and a larger network. While scale and network may sound the same, there are two distinct differences that work hand-in-hand. Scale is the size of the spend at any particular carrier, while network impacts the operating efficiency of that carrier within your portfolio. Leveraging both your scale and network to the benefit of the carrier community is a true differentiator.

What Makes a Good Acquisition Target?

Strategic acquisitions have continually been a core part of Transplace’s growth strategy. This has led to seven successful acquisitions in the last seven years. And we do not buy companies simply to grow our market share. Every acquisition has been to strengthen our core business – North American logistics management services for manufacturers, retailers and distributors.

Because acquisitions are part of our overall mission, we are very selective about the companies we target. For us to have the most successful acquisition possible, we need to have revenue synergy together, and the company being acquired also needs to bring strong human capital to the table. In fact, we’ve kept most of the teams from the companies that we acquire, because these teams bring new ideas and innovation into the business, and they were a key reason for their organization’s success.

Here are some other key aspects that organizations should consider when assessing a potential merger or acquisition:

  • Are they a cultural fit: Does the company have the same values and approach to associates and customers as your company? This is important in a successful acquisition with a smooth transition for their legacy customers.
  • Technology knowledge and operational excellence: Where do they stand on their own? Where can we help and come together? Learning from one another will improve the process for all team members.
  • Innovation is in demand: The market is demanding both innovation and the scale in the network for ultimate success. What innovations do they bring to the table and how can we help drive innovation in their current operations?
  • Boutique level service, world class scale and technology: Acquired customers want to continue to feel that they are as important as they were with the acquired company, while having the additional benefit of network value and world class technology and continuous improvement.

At Transplace, we understand evolving outsourcing needs and always aim to overcome global supply chain and logistics challenges for our customers. This has been and will continue to be a part of our growth strategy to help bring the best service possible to shippers.

With our customers always top of mind, we will continue to grow in this field and invest in companies that enhance the experience of our entire portfolio and share our values of Customer First, People Always.

Has your organization discussed any M&A activity?



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