Page 37 - ATR 2 2014 web

mergers: The New

retirement plan

Owners open to acquistions for pensions

By Scott travis

Contributing Writer

Take a good look at the trucking
companies of today. Tomorrow they
might not look the same.
A sharp increase in mergers and
acquisitions in recent years shows
few signs of decreasing this year, or
any time soon, according to industry
experts.
The shaky economy, uncertainty
over new regulations, an aging corps which forecast more such activity to recent ATA report predicts that tonnage
of owners and drivers, fear of some come this year. hauled by trucks will increase by 2.3
crippling litigation and other factors “What you have seen is that prob- percent, meaning the trucking industry
have made conditions ripe for buying ably, from the standpoint of small com- will be responsible for 70.8 percent of
and selling. And it remains to be seen panies, $25 million and below, about 20 the tonnage hauled in the country.
how dramatically the merging and percent of them want to sell,” said Lana Freight revenues are expected to
consolidation of companies and fleets Batts, a partner with Transport Capital reach $1.3 million, a 63.6 percent over-
will affect the workforce, especially the Partners, the mergers and acquisitions/ all increase.
driver ranks, in the years to come. capital sourcing/advisory services com- However, because the trucking
“Right now it’s a great market,” pany headquartered in Windsor, Colo. industry is far less consolidated than
said Andy Ahern, of the Phoenix-based Yet, given the wave of merger and the railroads and airlines, companies
trucking management and consulting acquisition activity, experts are still are looking within this fragmented
firm Ahern and Associates. “I think reluctant to predict a day when the environment to increase efficiency
you’re going to see a lot more.” industry consolidates to the point where through growth, that is taking on other
Ahern described a landscape in there is only handful of big carriers, as companies.
which owners — and a great number has been the case with the railroad and Banks are providing solid loan
of trucking companies in the nation airline industries. opportunities, allowing buyers to access
are family-owned — are taking stock of “First, it is important to understand capital and buy up companies with good
the factors affecting the industry and that this is not a concentrated indus- value in a hot market.
deciding to consider mergers as a way to try,” said Bob Costello, chief economist “The banking industry is making
cushion their retirement and still have and vice president of the American more money and taking less risk, and
something to show for a lifetime of Trucking Associations. “Even with that definitely impacts trucking,” Ahern
work building a business. more M&A activity, it is very diverse said.
“When you get older you don’t and competitive. With that said, higher Buyers are often looking for niche
want that risk anymore,” Ahern said. costs (e.g. equipment, regulations and companies, maybe those who specialize
“For most of us our business is our drivers) along with a lackluster recovery in logistics, or have a regional presence,
retirement account.” has made M&A activity very attractive or both.
Last year saw a 57 percent increase for some.” “We are actively looking at acqui-
in merger and acquisition activity over And the immediate future holds sitions,” said CRST International
2012, according to analysis by con- opportunities for smart owners to grow
sulting firm PricewaterhouseCoopers, their companies rather than sell out. A 

aRkaNSaS tRuckiNg RepoRt | issue 2 2014 37