When the coronavirus pandemic started spreading across the U.S. in March, panic buying and mandatory lockdowns sent the logistics industry into a tailspin. The chaos of the past few months has highlighted both existing inefficiencies and sustainable business practices throughout the industry.
Essential manufacturers faced mercilessly high demand, while non-essential manufacturers were forced to close up shop entirely. Volumes surged and plummeted, sending carriers from the highway to the parking lot seemingly overnight. Some third-party logistics providers (3PLs) have managed to weather the pandemic with their balance sheets intact. Providers with less diverse networks, on the other hand, have stalled out.
For companies that have continued to thrive, now could be an ideal time to consider moving into acquisition mode. That is exactly what 40-year industry mainstay TRAFFIX has done.
The pandemic was not the primary driving force behind the TRAFFIX team’s decision to enter acquisition mode. “Acquisitions have been part of our ongoing corporate growth strategy for quite some time,” said TRAFFIX’ Vice President of Corporate Strategy Greg Shnerer. The company completed its first acquisition in 2018. “After a successful integration, we continue to feel confident in our business plan. We have a strong financial position allowing us to pursue sizable acquisitions.”
Still, the pandemic has not been the deterrent that some might expect.
According to Managing Partner, Daniel Snow, “The coronavirus pandemic has created major challenges in all facets of the 3PL space. It has exposed what works and what doesn’t. If anything, the pandemic has strengthened our conviction in our own business model and increased our willingness to invest further into growing TRAFFIX.”
TRAFFIX hopes to acquire companies that not only align with their growth strategy but are also committed to going the extra mile for customers.
“[The acquisition] should result in improved technology benefits, further geographical coverage or complement both companies with an improved suite of services,” TRAFFIX Managing Partner Duane Coghlan said. “Culturally, this must be a good fit for both sides. Potential companies should have a strong record of financial performance with a diverse customer base. Ideal partnerships will benefit both companies and create improved value for the customers, employees and vendors.”
Snow also emphasized the importance of culture, noting that a good culture fit for TRAFFIX would need to have top-notch employees, a solid growth trajectory, an amazing reputation and a team committed to high performance.
TRAFFIX is committed to looking into companies that can match its own ambition and reputation for excellence.
“When we see a company with a weak reputation for quality of service and a great deal of customer dependencies, we often find along with that comes a management team that lacks long-term vision,” Snow said. “It is our goal to build upon an organization that is currently doing all the right things, not to fix something that is broken.”
Global uncertainty has taken its toll on some business owners – even if their businesses are thriving. Owners who are ready to swap the daily load of running a successful company during a pandemic for something a little steadier will find that now could be an opportune time to sell. Companies like TRAFFIX with stable foundations and forward-looking business plans are still interested in acquisitions despite the volatile markets, and owners can feel confident knowing their business is going to be managed well in the future.
Coghlan noted that, at the end of the day, one of the most important elements of any acquisition is that it aligns two teams that can visualize winning and growing together as a cohesive unit.