Covid-19 shuffles M&A landscape

TORONTO, Ont. — The Covid-19 crisis has put many trucking companies on the ropes, while also creating a new set of well-liquidated first-time buyers. Because the pandemic has hit certain segments harder than others, some well run companies are suddenly up for sale and opportunistic buyers are stepping up for what could be a once-in-a-lifetime buying opportunity.

Just because a trucking company is struggling through this crisis, doesn’t mean it’s a bad company, points out Mike McCarron, president of Left Lane Associates, a firm that helps buyers and sellers orchestrate mergers and acquisitions.

“There are obviously a lot of companies that are struggling, that are barely making it,” McCarron acknowledged. “There are a lot of really good companies that were growing, that had good brands, good products – this came so out of the blue, they’re really struggling. But it doesn’t mean they’re bad companies. When you’re growing, cash is a problem, and a lot of really good companies that should not be in trouble are in it based on zero fault of their own. Very few companies have three to five months’ cash on hand.”

New buyers

Left Lane has done three deals since the beginning of the Covid-19 crisis, and all three involved first-time buyers.

“Certainly, the companies that have liquidity, the companies that are sitting in a good cash position understand this is a great time to buy,” McCarron said. “People are starting to understand with cheap money, it’s a great opportunity.”

McCarron anticipates we’ll see more smaller, tuck-in transactions this year, but he added there’s a big appetite for freight brokerages.

While new buyers are emerging, traditional ones are standing on the sidelines. TFI International, which sits atop the Top 100 listings, has put some deals that were in the works on hold.

“We were working on a significant sized deal prior to the virus, but we are not going to be doing any major deals in 2020,” said Alain Bedard, chairman and CEO, when discussing Q1 financials with analysts. “It’s too risky, not knowing how long this virus is going to be with us for.”

Titanium looks to make splash

If any fleets are to make a big splash this year through acquisition, it may be Titanium Transportation. The company has publicly stated it’s on the hunt for a “transformative” acquisition, which may double its size in one deal. It has $2 million in cash and $11.1 million in credit available to finance such a deal. It also has $12.5 million in acquisition-related facilities available.

“We have a ton of dry powder sitting in the barn,” CEO Ted Daniel said during a call with analysts.

(Photo: iStock)

In further comments to Today’s Trucking, Daniel said: “Our current balance sheet is able to support a transaction that is transformational in nature. I believe the M&A market will be more active. Given that these are challenging times, we hope to offer a solution for those considering a transaction.”

But he said the Covid-19 crisis doesn’t change the company’s approach to finding a match.

“Our approach has always been to provide a fair valuation that will result in a win-win outcome,” he said.

The company is seeking a deal with a struggling, but well-run company, whose owner may be looking to be part of Titanium going forward.

(Photo: iStock)

“We are looking for companies that didn’t expect this (crisis), good companies, good people, that want to become a part of our more technologically-advanced organization,” said Daniel.

Seasoned deal-maker Mark Seymour, CEO of Kriska Group, also said the Covid-19 outbreak hasn’t changed his perspective on the M&A market or on the type of fleet that is attractive to purchase.

“M&A can be a fool’s game. It can make you better or broke.”

Mark Seymour, Kriska Group

“M&A can be a fool’s game,” he said. “It can make you better or broke. It’s not market-dependent or recent events-driven. It’s alignment with willing dance partners. So that said, I don’t think anything is more attractive right now. If anything, it’s masked by the lack of clarity. It’s easy to see past earnings and performance, but very hard to predict the future. Buyers are buying future.”

He added, “We have been a buyer and will remain so. Big, small, tuck-ins – it doesn’t matter to us. What matters is good decisions that make us better, not just bigger.”

Asked if struggling fleets operating under the controversial Driver Inc. model, which classifies employees as independent driver services, are touchable in this market or any other, he said “Not a chance. If we can’t do it right, we won’t do it at all.”

Due to the Covid crisis seen this year, McCarron expects the Top 100 list to look very different next year.  “You’ll find that during a crisis like this, the pecking order changes a lot,” he said.

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James Menzies is editor of Today's Trucking. He has been covering the Canadian trucking industry for more than 20 years and holds a CDL. Reach him at or follow him on Twitter at @JamesMenzies.

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