Is this the time to buy or sell a trucking company? Businesses on both sides of the question are concluding the time is right for the sort of transactions missing since the beginning of the U.S. economic downturn.
That’s especially true if you’re a midsize carrier looking to grow by purchasing existing capacity, or a company owner looking to retire while ensuring your business survives.
Brown Trucking of Lithonia, Ga., purchased two smaller operators — Schrader Trucking and West Brothers — in the past three months, while Integrated Freight of Sarasota, Fla., bought Midwestern carrier Bruenger Trucking in October.
In all three cases, the family-owned trucking businesses wanted to sell to buyers who would not only purchase their companies but expand them.
“It’s a good time to be acquiring companies,” said Brian Kinsey, CEO of Brown Trucking, a company he acquired in 2008 from founder James W. Brown.
Sidebar: Looking Beyond Due Diligence.
The economic recovery, sluggish as it is, and a healthy two to three quarters for many trucking operators are loosening pent-up acquisition activity in trucking, as trucking owners finally find they can sell their companies at a decent price. Financing is more widely available as well, as trucking looks like a better investment to many bankers than it did during the recession or even in early 2010.
The recent purchases are relatively small but suggest larger deals may be coming as companies with balance sheets tattered by the downturn look at the direction of their businesses while businesses that hoarded cash and maintained strong credit lines look to leverage their financial health.
Transport Capital Partners, which advises trucking companies on sales and acquisitions, said in March that one in four truckload carriers it had surveyed said they might sell their companies within 18 months. “The total number of carriers interested in selling (went) up about 50 percent over the last quarter,” TCP Managing Partner Lana Batts said at the time.
As the freight recovery surged in the spring, and truckload capacity choked back, those company owners finally saw an exit ramp as the value of their businesses increased, and more prospective buyers called.
Kinsey, a veteran trucking executive who spent years with Landstar System, was one of the shoppers. “We’ve looked at least at 40 potential acquisitions over the last two years,” Kinsey said, and settled on Schrader and West Brothers this fall.
“We’re really, really picky. In all our cases, we found owners who were the founders or the children of founders of trucking companies who were looking to retire,” he said. And none of the companies had a for sale sign on the terminal gate.
For Brown, a dedicated and short-haul truckload carrier in the Southeast, the purchase of Schrader and West Brothers strengthens its existing business and adds warehousing, equipment leasing and brokerage to its portfolio. “We’ll be able to offer those services to our private fleet customers, who then can pretty much do business with one company,” Kinsey said. “If we go up and down the supply chain with a complete offering, I think we’re better off, and so are they.”
The acquisition of M. Bruenger Trucking of Wichita, Kan., is one of several acquisitions planned by Integrated Freight as it builds a national freight network.
CEO Paul Henley founded IFC in Sarasota, Fla., in 2008 expressly to acquire established motor carriers, starting with Morris Transportation and Smith Systems Transportation. Bruenger is a 74-year-old company run since 1975 by CEO Butch Bruenger, the son of founder Maurice Bruenger. The buy-out boosts Integrated Freight’s annual revenue to more than $60 million and adds density and coast-to-coast lanes to its network, which has largely focused on the upper Midwest and Texas. Bruenger hauls refrigerated and dry van freight, including foodstuffs and general commodities, dispatching 160 tractors from its Wichita headquarters.
“Acquiring a company with the reputation and longevity of Bruenger in such a strategic geographic area is a watershed event for us,” Henley said. Integrated plans to build a $120 million national network of regional truckload carriers.
Brown Trucking is focusing on building density and expanding its business in the Southeast, though its acquisitions expand its reach into neighboring regions as well. “Our business is a little bit different” than the standard truckload operation “in that we’re a short-distance dedicated carrier,” Kinsey said. Most of its trips are within a 250-mile radius. “We do lot of repetitive 30- to 40-mile runs.” At Schrader, “every one of their outbound shipments is within a dozen miles of their terminal.”
The Schrader acquisition added almost 100 trucks to Brown’s fleet, while West Brothers added 220 trucks and four operating divisions. Brown now operates about 800 trucks and 3,500 trailers. Each of those trucks represents business.
“We’re not buying trucks on speculation to pursue new business,” Kinsey said. “We’re growing by purchasing existing active capacity.”
Contact William B. Cassidy at email@example.com.