For sellers looking to make a deal, there are still plenty of trucking M&A buyers out there. But they’re more selective than before, particularly in smaller and middle-market sectors. The following factors will affect the M&A landscape over the next 12 months:
ELD-Induced Chaos
Electronic logging devices seem to have caused thousands of trucks to vanish on December 18. DAT solutions reported growing load to truck ratios that rose to 10:1 in January. Truckers were left dealing with angry customers, with drivers demanding higher pay or promising to leave. ELD has been the source of utter mayhem. Companies that previously hoped to grow through acquisitions are waiting for the market to balance out.
More Chaos: Trump
Donald Trump was long treated as a long shot candidate, so when he won the presidency, everyone was shocked. His ongoing threats to kill NAFTA have sent many buyers and sellers scrambling. This protectionist bent could alter the entire shipping industry. In the wake of this fury, many offers were removed from the table.
Things remain in flux, and it’s unclear what Trump will do next. In Canada, high tariffs could affect other industries, making international mergers more risky. Carriers are waiting to see what comes next as NAFTA negotiations break down and Trump continues to make threats.
The Real Estate Market
Real estate is a major player in trucking M&A. Carriers that own property have wealth tied up in land, not just trucking. So selling a fleet may also mean selling land—a double headache, but also a double windfall. On the other side of the coin are carriers who lease properties. Landlords increasingly demand longer leases. Consider how this might affect owners in their fifties who hope to soon retire.
As demand for commercial real estate skyrockets, many truckers will make decisions more motivated by real estate than by transportation. Some are making their decisions earlier than expected, amid great pressure.
The Broker Landscape
This time last year, carriers were hastily acquiring freight brokers. The world of ELD has changed all of that. Carriers already have too much freight. Now they’re getting even more customer calls than ever, eliminating the middle person of the broker. Carriers are anxious that the broker model may not be sustainable in this new world. Rather than seek deals, carriers may wait until the dust settles on the new world to see who’s left standing, and decide what to do next.
What Hasn’t Changed
While there’s plenty of uncertainty in the market, three things haven’t changed. Truckers are aging and hoping to cash out. They want to know what their companies are worth—and they have high hopes for that worth. And finally, the most important determinant of value is what someone will pay for a trucking company. The market matters, yes, but the needs of the buyer and seller are the major determining factors.
About The Hatteras Group
The Hatteras Group is a collaborative team of professional intermediaries and advisors, leading business owners and entrepreneurs as they navigate the complex and often emotional process of selling or buying a business. We represent owners to sell their businesses, lead proprietary acquisition searches, source equity and debt and provide business valuation services, generally working with companies whose annual revenues are $5MM to $50MM.
