Mergermarket, the leading provider of forward-looking M&A intelligence and data to M&A professionals and corporates around the world, featured GlobalTranz’s plans to grow its capabilities through strategic acquisitions that add value for shippers, carriers and freight agents.
GlobalTranz, a private equity-owned provider of transport logistics services, is actively looking at six or seven acquisition candidates of varying sizes, CEO Bob Farrell said.
The Phoenix-based company, which generated USD 854m in annual revenue for 2017 – up from USD 550m the previous year – has completed five acquisitions over the last 13 months, he added. A month ago, it purchased AJR Transportation, a Texas-based freight brokerage and logistics company. It expects to close on one or two deals in the first half, according to Farrell, who was appointed CEO in early 2016.
Some of the targets in question are the same size as GlobalTranz, while some generate as little as USD 10m in revenue, he added. Targets on the larger end of that spectrum tend to have more diversified business models and bigger customer bases, while smaller targets can offer niche technologies or logistics solutions, he said.
The company is “on the path” towards ending 2018 with USD 1bn in revenue, not including additional acquisitions, Farrell said.
Generally, GlobalTranz wants to find companies with “great revenue synergies as opposed to expense synergies, which will either be there or not,” said Farrell.
Targets that bring new capabilities in international ocean and air freight, intermodal transport and last-mile delivery would also be attractive.
“People are shipping big and bulky items as well as big fluffy items in ways they’ve never done before,” Farrell said. As a tech-driven company, it would be helpful for GlobalTranz to acquire solutions in those areas instead of building them, he said.
In particular, technology related to predictive analytics, machine learning, advanced customer management and pricing engines would be desirable to obtain via acquisitions, he added. As far as attractive markets, GlobalTranz is seeing a lot of freight opportunities in durable goods, food manufacturing and infrastructure.
GlobalTranz has seen “a lot of goods moving northbound” from its customers in Mexico. For this reason, it could buy Mexican logistics companies, the CEO said. He maintained that the company is not yet in talks with any groups from that area, but is looking broadly across the US.
The company is not using an external financial advisor for deals, as it has an internal team that is “able to do pretty detailed levels of diligence and analysis,” said Farrell. It retains KPMG, RSM and Ernst & Young for auditing and other financial purposes, as well as CBIZ for quality of earnings and tax analysis, he added.
In 2014, GlobalTranz completed a USD 40m Series C led by Providence Equity and Susquehanna Growth Equity, which own the majority of the company. Shortly after, the company’s then-CEO Andrew Leto told this news service that GlobalTranz could seek additional capital, or possibly an IPO, by 2016, when he expected its revenue to reach USD 1bn. According to Leto, the company had raised USD 53m to date. Its law firm was then Greenberg Traurig.
Farrell said GlobalTranz no longer uses Greenberg Traurig and that its counsel is now Quarles & Brady as well as Weil, Gotshal & Manges. When asked if the company could seek an IPO upon reaching the USD 1bn milestone, Farrell replied that this plan is not in the cards right now. Asked about other exit options, he said that GlobalTranz is focused on increasing the value of the company, declining to elaborate.
Upon Providence and Susquehanna’s investment, GlobalTranz moved from “being entrepreneurially-led to focusing on profitability. We did some things internally to get ourselves aligned to grow organically and also have the framework to integrate acquisitions,” he added. Specifically, the company enhanced its technology, upgraded its staff and “made decisions based on data trends.”
Providence and Susquehanna did not return calls seeking comment.
For more information on GlobalTranz, visit GlobalTranz 2017 Financial Results and Highlights