FORWARDER M&A Focus

M&A FOCUS M&A ARTICLES

A word from Freight Mergers or others in the industry

COMPANIES FOR SALE

in the freight forwarding and logistics industry

OPPORTUNITY OF THE MONTH A buyer and a seller selected by us for promotion

F R E I G H T

POWERED BY

MAY 2019

M&A for the global freight & logistics industry

+44 (0)20 3872 6906 • enquiries@freightmergers.com 11 Gower Street, London

Freight Mergers are specialists in selling owner-managed freight forwarding, transportation and logistics businesses. For most company owners, selling their business is the most important financial transaction of their life. Therefore, we tailor our services to each individual client’s needs, utilising our mastered, proactive approach to selling businesses that connects strategic buyers with sellers who are aiming to realise the value of their business.

We have over ten years of experience in the sector and, due to our specialist approach and unparalleled network, we can put you in touch with international and domestic trade buyers.

www.freightmergers.com

F R E I G H T

Are you planning to buy or sell a freight forwarding company?

M&A FOCUS

F R E I G H T

WITH

D

WANT TO KNOW MORE? Further information can be found at freightmergers.com

avid Roberts of corporate finance team Freight Mergers

we are always keen to talk about the types of offer you could expect

gives his thoughts on the first quarter of 2019 and what lies

to achieve, were you to begin the sale process in the current market.

ahead for deal activity for the rest of the year...

Sector appetite

In a time where Brexit has hijacked the media, it’s been an incredibly

Growth by acquisition presents an opportunity for both companies

tough time for UK businesses that simply seek clarity on what a

in the process and their respective shareholders, staff, customers and

departure from the European Union could look like. The freight

suppliers. The strategic benefit for freight companies is the opportunity

industry is a cornerstone for the British economy and a sector that

to cross-sell services and to enable better buying power with the

desperately requires political certainty. It is reassuring to see so many

carriers, due to the increased freight volume a merge brings. The fact

companies working closely with their customers to form plans on

remains that many companies establish themselves and later solidify their

how to navigate the process in the most seamless manner. Developing

position within the market by acquiring successful, service-oriented,

contingency plans and enhanced supply chain and customs structures

family-owned companies. Finding opportunities which fit culturally as

will certainly mitigate the impact Brexit has on their customers.

well as strategically is still very high on the agendas of both private and listed, forwarding and transportation companies, which aim to further

As we are aware, with volatility comes opportunity. It is evident that

capitalise on the fragmented market that remains.

many freight forwarders are trying to capitalise on this uncertainty by exploring new international markets and trade lanes, whilst also

I envisage further activity for the remainder of the year, as companies

identifying opportunities to deliver new domestic services, should we

attempt to enhance their network and coverage both domestically

leave the single market and the EU customs union.

and internationally. Currently, we are seeing many owner-managed businesses engaging in the sale process, whether that is to secure a

Successful transaction

long term future for their employees and customers, or to continue

The Freight Mergers team successfully advised the shareholders of an East

their growth with the additional financing a larger group can bring.

Midlands-based freight forwarder on the sale of the business. The buyer

Additional skillsets, knowledge and experience which arise during

provides a full range of air, land and ocean freight services globally. This deal

M&A help buyers enhance their service offering and geographical

completed in February and saw the management retained in the business,

coverage. This should in turn deliver higher levels of customer

helping to ensure that synergy benefits are fully realised, whilst maintaining

satisfaction, an objective for nearly all privately owned companies.

a smooth flow in the day-to-day operations.

I am optimistic for the M&A market during 2019; I still observe a lot UK meetings

of confidence amongst our clients that there is economic growth and,

It has been fantastic to meet key decision makers throughout the UK

as such, M&A appetite remains strong amongst C-suite executives.

in recent months. The freight industry has some of the most dynamic,

We are always seeking dynamic, growing businesses to work with.

driven and proactive people within it. It is reassuring to see businesses

If you are considering your strategic options for 2019 and beyond,

performing well in such uncertain times. The team and I have discussed

I would be delighted to discuss this with you and share my thoughts.

various stages of the M&A process with an array of business owners

Please contact me or a member of my team on the details below.

during Q1, with a large proportion of our meetings revolving around market appetite and valuations. It is an ever-changing landscape and

David Roberts, Senior M&A Consultant, Freight Mergers

Direct: +44 (0) 203 872 6906 Mobile: +44 (0) 7766 501 202 david@freightmergers.com

OUR TAKE ON

2019 ACTIVITY

M&A FOCUS

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WITH

COMPANIES

FOR SALE FRENCH FREIGHT FORWARDER

GERMAN FREIGHT FORWARDER

Ref. 898FM | France

Ref. 763FM | Germany

Key business features

Key business features

•• Established in early 2000s

•• International air & ocean freight forwarder

•• Privately owned

•• Privately owned – one shareholder

•• International air & ocean: 70%

•• 3 offices across Germany

•• Logistics & road freight: 30%

•• 19 staff

•• 46 staff (2 locations)

•• 50% air freight, 50% sea freight | 70% export, 30% import

•• Clearly defined 2nd-tier management structure

•• Sectors: events logistics and general cargo

•• Export: 66% (China, India, S.E Asia) | Import: 33%

•• Export to China, South America, North America

•• Sectors: aerospace, events, AOG, general cargo

•• Import from China

•• Turnover €16m

•• Turnover €7.0m

•• EBITDA €1.0m

•• PBT €1.0m

IF YOU ARE INTERESTED IN ANY OF THESE OPPORTUNITIES, PLEASE CONTACT...

SELLING OR BUYING A FREIGHT COMPANY? GET IN TOUCH

+44 (0)20 3872 6906

enquiries@freightmergers.com

GERMAN FREIGHT FORWARDER

SOUTHERN & SOUTH AMERICAN N.V.O.C.C. & FORWARDER

Ref. 290FM | Germany

Ref. 448FM | South East USA & South America

Key business features

Key business features

•• Established in 1980

A licensed, national customs broker, freight forwarder and NVOCC

•• Privately owned

•• Established 20 years ago

•• 2 offices across Europe, 44 staff combined

•• Privately owned – looking to continue under new ownership

•• 90% sea freight – Asia, EU, Far East | 10% air freight

•• 20 staff across 3 locations

•• Imports: FAK Cargo, consumer, textiles, industrial

•• Sector: focus on moving large mining, construction and oil/gas machinery, also moving general freight

•• Exports: Automotive, chemicals, industrials

•• 60% ocean | 30% road | 8% air | 2% rail

•• Owner would look at retaining a minority stake in the business

•• Turnover $10m

•• Turnover €20m | PBT €200k •• No debt

DAVID ROBERTS, M&A CONSULTANT, FREIGHT MERGERS

david@freightmergers.com +44 (0)20 3872 6906

M&A FOCUS

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COMPANY SUMMARY:

WITH

MULTIMODAL FREIGHT FORWARDER

Ref. 2232FM | London Heathrow (LHR) Key business features •• Company trading 10+ years •• Six full-time members of staff including two Directors •• IATA and BIFA accredited •• Diverse spread of clients, top 15 represent 78% of T/O •• Global network of partners offering multimodal solutions •• Moved 683,218 kg of air freight in 2017 ••157 LCL and 175 FCL shipments in 2017

Financials 2018 ••Turnover: £1.30m •• Gross profit: £410k

AIR

Import 17% Export 48% OCEAN

Import 18% Export 8% ROAD

Import 3% Export 1% UK DOMESTIC

4%

FINANCIALS

T/O: £1.3m Adj. PBT: £200k GET IN TOUCH

+44 (0)20 3872 6906

•• Adj. Profit Before Tax: £200k 2017 ••Turnover: £1.43m •• Gross profit: £454k

SELLER OF THE MONTH •• Adj. Profit Before Tax: £220k

Ref. 4356FM | UK, US & Germany Overview •• My client offers global freight forwarding, customs brokerage and supply chain management providing air, ocean & road services alongside value-added services •• Having grown organically over a period of 45 years, they are now generating annual consolidated revenue of €300+ million •• Originally established in Europe, they now have a worldwide presence with 20 offices and 1,000+ employees whilst still remaining privately owned ••The primary markets for my client are China, U.K, Australia, South Africa, the Middle East and the U.S. •• With consistent profits and a capital fund, my client is in a strong position with the ability and capacity to acquire privately owned companies

Investment remit •• Focus on international freight (air and ocean), with limited trucking or domestic operations •• Companies located in UK, U.S and Germany ••Turnover of the business to be a minimum of €5.0m, preferably €10m - €50m •• Privately owned companies •• 5+ staff •• Gross operating margin: Expected to be in region of 15 to 30% •• Company must control business rather than large amounts of agent-routed cargo

BUYER OF THE MONTH

M&A FOCUS

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WITH

ARE YOU

READY TO EXIT? D eciding to sell your business is most likely

If you are unable to answer these questions now, then start to think

the biggest decision you will ever make

about what you want. If you know the answers to them, then you

as a business owner.

are on the right path.

Are you thinking of selling?

Can you take a break?

Careful thought and planning is vital if you want to successfully sell

Day to day I speak with business owners heavily involved with their

your business. Making your business as attractive as possible to allure

companies. If you are relied upon, it is time to reduce this dependence!

prospective acquirers is critical.

Freight, logistic and transport providers are people businesses so What do you want to achieve?

step back and make sure you have experienced management in place

Gaining clarity on what you want before starting the exit process is

that can shoulder the responsibility for these key relationships.

paramount to the transaction. You should have an idea of who you would

This will only enhance the value of the company.

like to purchase your life’s work. Just anybody is not going to cut it.

Preparation Maximise value?

Early planning significantly increases the chances of a successful outcome. Preparation puts the seller in a strong position. Think like an outsider, identifying key risk areas and taking steps to ensure that

Preserve the culture?

these risks are mitigated. Have ammunition prepared to receive a

Is now the right time to exit?

Being able to provide accurate, timely financials is imperative to a

favourable price for your business.

smooth transaction. Preparing forecasts and making comparisons is a good place to start. This goes hand in hand with having a strong Maintain family heritage?

finance director who has a clear understanding of methods to improve financial management. If confidence can be secured by investors the

Remain involved and experience the growth investors can facilitate?

transaction is less likely to slip up during financial due diligence.

Keeping financials up to scratch assists the process but portraying the story of your business helps the acquirer understand the peaks and troughs you have experienced. Most importantly, it helps them understand the plan for the future. The underlying focus of your 'story' should be what separates you from your competitors and what drives your success.

During the sale process, it is critical to keep the business running on its trajectory. Transactions are complex and highly emotional, but you should aim to minimise the impact on your employees and ensure key client relationships are maintained. This is hard, but is important to ensure that value is solidified for the potential purchaser.

Realistic You need to understand the business's value drivers, industry benchmarks and market trends to ascertain what you can expect prior to the process beginning. Many factors affect the value of your business that are not in your control. You should note this and be prepared.

All ready?

When you are ready to transition, you should be confident everything is prepared to allow the transaction to progress. If you have thought about the above points, the rest should take care of itself.

Luke Mitchell, M&A Consultant, Freight Mergers

Luke Mitchell

David Roberts

M&A Consultant

Senior M&A Consultant

Direct: +44 (0)20 3872 6905

Direct: +44 (0)20 3872 6906

Mobile: +44 (0)7824 874 839

Mobile: +44 (0)7766 501 202

luke@freightmergers.com

david@freightmergers.com

www.freightmergers.com

JAMES HUGHES

M&A Consultant james@freightmergers.com +44 (0) 1454 275 933

FREIGHT MERGERS

8 Apex Court, Almondsbury Business Park, Bristol BS32 4JT +44 (0)1454 275 950 www.freightmergers.com

DAVID ROBERTS

M&A Consultant david@freightmergers.com +44 (0)1454 275 941

JACK LONNEN

M&A Consultant jack@freightmergers.com +44 (0)1454 275 931