The market for buying and selling transportation and logistics companies is hot and getting hotter in 2021. Investors who have been holding onto their cash due to pandemic-related uncertainty have reentered the arena, and logistics companies – many of which proved their resilience over the past two years – are in high demand.
The industry has been on something of a roller coaster over the past few years when it comes to buying and selling. Mergers and acquisitions saw a banner year in 2018 before slowing down significantly in 2019. That slow down more or less continued throughout 2020 due, in large part, to uncertainty surrounding the coronavirus pandemic.
Pent-up demand is making its way to the surface in 2021; this year has seen an explosion in M&A activity due to the large amount of money available from strategics, private equity and venture capitalists.
While owners hoping to make an exit in the transportation space should have no trouble selling, Logisyn Advisors Managing Partner, Ron Lentz urges owners across the industry to know their companies’ worth before entering into the M&A world.
“When you look at the supply and demand today, there is way more demand than there is supply,” Lentz said. “In private equity today, we estimate there is somewhere over $1.5 trillion of money that has to be invested into the marketplace, and somewhere between 10 and 12% of that money is going to be invested in the transportation and logistics space.”
The most attractive businesses within the transportation and logistics industry are those that know their place, according to Lentz. Investors are looking for companies that have mastered their own niche, not those that are trying to be everything to everyone. For that reason, owners — especially those hoping to sell in the near future — should resist the urge to take on too much breadth and double down on their existing focus.
Lentz emphasized the importance of preparing for an exit both personally and professionally. That could look like meeting with tax advisers and looking out for family legacies while simultaneously keeping the company’s best interests in mind and formulating plans to take advantage of today’s market conditions. There is a wealth of opportunities available right now, and owners should take the time necessary to create a well-structured deal instead of jumping on the first offer that comes across their desks. The best way they can do this is by utilizing the right resources, like a mergers and acquisitions advisor that specializes in their niche market and can be their advocate.
Demand for transportation and logistics companies is expected to remain strong for the foreseeable future, buying owners the time they need to make the best decision possible for themselves and their companies.