Benchmark International is pleased to announce the successful transaction between The Colography Group, Inc. and Halstatt Legacy Partners.READ MORE >>
Benchmark International is pleased to announce the transaction between Yellow Jersey Logistics (PTY) Ltd and LCS Evolution (Pty) Ltd.
Yellow Jersey Logistics (Pty) Ltd offers niche transport solutions to the clearing and forwarding industry. The company has become entrenched in the industry, forming an integral part of their clients’ service offerings through reliability, speed, and the ability to tailor bespoke solutions. The company’s client base comprises leading freight forwarders and clearing agents, dealing with the import and export of a variety of goods. The company has maintained these relationships through excellent customer service.
The LCS Group (Pty) Ltd is a diversified logistics and end-to-end supply chain solutions business, operating primarily within the bulk mining and materials industry. The Group is driven by an entrepreneurial spirit and a desire for innovation and comprises several companies, including LCS Logistics, LCS Transport Solutions, Bay Shipping, LCS Fuels, LCS Prime Agri, LCS Fleet Support, and LCS Financial Services.
The LCS Group’s Head Office is situated in Heidelberg, Gauteng, with satellite offices/depots in Newcastle, Richards Bay, Durban, Kuruman, Brits, Delmas, Cape Town, Hoopstad & Camperdown.
Reon Britz, the CEO of LCS Group, said: “Yellow Jersey represents a key pillar within LCS’s logistics and supply chain portfolio and will enable the Group to further diversify its offering within the industry as well as positions it strongly for future growth. We would like to thank the Benchmark Intl team and in particular, Johann Haasbroek, for all the assistance in getting this important transaction across the line. We really appreciate all the efforts.”
Commenting on the transaction, Transaction Director Johann Haasbroek with Benchmark International added, “Transactions of this nature are particularly enjoyable when the synergies are self-evident, and the benefit to both entities easily apparent. I am confident that with LCS’s resources brought to bear, an already very successful company will go on to flourish still further in such a group environment.”READ MORE >>
Benchmark International’s client Gasket & Packing Inc. a Borger, Texas-based industrial supply and distribution company has successfully sold to a subsidiary of German-owned conglomerate Elring Klinger.
Gasket & Packing Inc. is an industrial supplier of fluid sealing & bolted joint assembly products. The Borger, Texas-based company with four locations supplies fluid sealing products for industrial customers. Products include manufactured gaskets, pump and valve packings, mechanical seals, hydraulics, o-rings, lubrication equipment, metal and concrete repair equipment, industrial bolting, and corrosion prevention supplies. The company also sells, rents, calibrates, and repairs torque equipment for bolted joint assemblies.
As an independent and globally positioned supplier, Elring Klinger is a powerful and reliable partner to the automotive industry. Be it a car or commercial vehicle, an optimized combustion engine, hybrid technology, or electric motor – they offer innovative solutions for all types of drive system in-passenger cars and commercial vehicles. They also make a commitment to making a contribution to sustainable mobility.
Transaction Director Luis Vinals stated, “This transaction demonstrates Benchmark International’s global capabilities, and the quality of its creative marketing strategies to identify buyers for our clients’ businesses. We are excited to see our client's legacy in the capable hands of such a reputable firm and look forward to their continued success.”READ MORE >>
Benchmark International is pleased to have successfully facilitated the acquisition of Local Bulk Haulage (PTY) Ltd by Leopard Line Haul (PTY) Ltd trading as Elite Line Haul.
Founded in 1995 by Peter Scholtz and Len Pretorius, Local Bulk Haulage (PTY) Ltd is a logistics company delivering specialised primary chemicals and liquid bulk commodities from the point of supply to the end-user effectively and efficiently. LBH has grown into a significant asset over the years servicing an enviable customer based comprised of blue-chip chemical and commodity entities.
Elite Line Haul, a subsidiary of Elite Truck Hire, is an innovative logistics company servicing clients across South Africa. As an established Level 2 B-B BEE Contributor, Elite Line Haul specialises in both short-term and long-term local distribution and line haul contracts. Over the years the company has developed a strong presence in the transport industry, operating from its headquarters in Elandsfontein, and ancillary branches in Durban, Cape Town and Port Elizabeth.
The transaction was strategic in nature and represents Elite’s diversification into liquid bulk haulage. As a consequence of the transaction, Elite Line Haul will now boast the largest fleet of Volvo trucks and trailers in South Africa.
Commenting on this, Andre Bresler of Benchmark International South Africa said: “On behalf of everyone at Benchmark International, we would like to wish both parties every success for the future.”READ MORE >>
By investing in the transportation and logistics sector, global companies open up the opportunity to advance the flow of goods throughout the world. Businesses in this industry, both domestic and international, benefit from integrated supply chain networks that connect companies and consumers through multiple transportation modes within industry subsectors.
- Logistics services include the management of fleets, warehousing, order fulfillment, logistics networks, inventory, supply and demand, third-party logistics, and other support services.
- Air and express delivery provide accelerated end-to-end package delivery services, as well as infrastructure for exporters. Growth in this subsector is greatly driven by the expansion of e-commerce.
- Freight rail moves high volumes of heavy cargo and products long distances via rail network.
- Maritime includes carriers, ports, terminals, and labor involved in the transportation of cargo and passengers via water.
- Trucking moves cargo over the road by motor vehicles over short and medium distances.
The transportation and logistics industry is consistently a highly fragmented sector. This is largely due to the fact that most fleets are small and there are few barriers to entry when it comes to starting a small fleet. Another major factor is that larger carriers have difficulty retaining drivers and achieving organic growth. Owners are always looking to gain efficiencies, optimize routes and spread fixed costs across more operations. In order to do so, they must create greater scale. It is common in the transportation and logistics sector for acquisition strategies to revolve around broadening service offerings, branching out the customer base, and expanding geographical reach.
Economic and Industry Factors
Burgeoning economies drive demand in the transportation and logistics industry. More freight demand stems from strong consumer confidence and upward surges in manufacturing, resulting in more loads and vehicles on roads. When this climate is met with driver shortages, it increases transportation costs, which can reduce margins.
The Impact of Amazon.com
Amazon has greatly raised global consumer expectations when it comes to rapid fulfillment. This demand has shifted distribution patterns, pushing companies to move warehouses closer to customers. Getting products to consumers faster increases the number of touch-points along the freight network.
The introduction and evolution of new technologies in the transportation and logistics industry are addressing over-the-road challenges such as driver shortages. Long-haul robotic trucks are being developed and tested. Driverless and remotely piloted deliveries are being incepted, such as aerial delivery drones. Experts expect it to be a very long period of time before these advancements face more mainstream use, but someday in the future, the possibilities they hold will be very real.
Artificial intelligence, the Internet of Things, data collection, machine learning, and blockchain are all being used within the transportation and logistics industry to gain major competitive insights and advantages, and therefore make better decisions that improve the performance of the company.
Transportation and Logistics M&A
In the 21st century M&A market, transactions in the transportation and logistics industry are often driven by specific demographic, macroeconomic, and regulatory factors.
Sellers are motivated by:
- The desire to take advantage of a strong overall M&A market
- Volume limitations due to driver shortages, tight labor markets, aging drivers and increasing hiring costs
- Aging ownership without a succession plan in place (usually companies with <$50 million in sales)
- Unease about industry regulations around safety, driver hour limits and logging devices
- The use of cross-border deals to counter negative impacts on operations, access new markets, and protect supply chains, as remaining agile in a globalized market is critical
Buyers are motivated by:
- Leverage of economies of scale in order to maintain profitability
- Capitalization on domestic economies with strong growth potential
- The need to hire drivers while facing tight labor markets and rising hiring costs
- Acquisition of smaller companies that expand service offerings
- Use of various asset models to free up capital and invest in better equipment
A high level of activity in M&A in the transportation and logistics industry is contingent upon suitable timing in a growing economy, low interest rates, and widely available capital. It usually takes up to nine months to complete an M&A transaction, so timing and forward thinking should be considered when deciding to take your company to market.
Are you considering selling your company? Even if you are merely exploring the idea, our M&A specialists at Benchmark International can help you decide if and when a merger or acquisition may be right for you. We’ll work closely with you to ensure that you never have to compromise value or timing, and that you are only matched with the most suitable opportunities.READ MORE >>
A study by Private Equity Info has identified the top 10 industries that private equity firms have been acquiring during 2018. Below is a breakdown of the industries along with why they have been so popular with private equity firms.
Manufacturing features on the list, in part, as a result of advancements in manufacturing. With automation, processes are made more efficient in many different sectors such as technology, aerospace, automobile and medical devices, making manufacturing companies an attractive prospect for private equity firms as they can utilise the technology in their portfolio companies and it is a good investment.
Watermill Group is a prime example of a private equity firm acquiring manufacturing companies. It currently has three manufacturing companies in its portfolio and within the past year acquired Andaray (Holdings) Limited and its subsidiary Cooper & Turner.
Commenting on this, Steve Karol, Managing Partner at Watermill Group said, “We are bullish on manufacturing in North America. Advanced manufacturing is creating a lot of new opportunities in many different sectors for many different companies.”
Similar to manufacturing, the software industry is popular with private equity firms as it can be utilised within other sectors for their advancement.
Software can be utilised in all manner of sectors and is proving particularly popular in retail as it can detect changes in customer attitude. While a valuable asset to have, it is incredibly difficult for other sectors to replicate what the software can do, therefore lends itself as an add-on to other companies.
Proof of this is within European M&A. Within the last year, software M&A activity set a new record for the number of transactions conducted and one of the main drivers for this growth was private equity, with statistics from Mergermarket showing that there were $11.2 billion of private equity deals conducted out of the $24.7 billion overall total for 2017.
Once again, private equity is investing as technology is a useful asset to be used to improve portfolio companies.
What has been interesting over the past year is how private equity firms, themselves, have started to utilise technology for their own benefit, not just for the benefit of portfolio companies. For example, artificial intelligence systems are now being used to screen investment opportunities. This phenomenon is not expected to slow down either, as a survey by Coller Capital shows three quarters of investors believe their private equity programmes could be improved by the use of external data sources such as third party software and cloud applications to the digital marketplace.
There is an interest in healthcare from private equity given the fact that this is a growth sector because of the ageing population and the fact that the system is fragmented and needs to be consolidated. Recent acquisitions in this industry include that of Envision Healthcare by KKR in June 2018.
It’s particularly good news for healthcare companies in the UK, as private equity firms have been increasingly active in this market, believing the sector will fare well throughout Brexit.
Data, in a similar way to technology, has been popular with private equity firms because of both acquiring the assets for their portfolio companies and because data can be used within the transactions themselves.
The use of data and analytics in private equity is gaining momentum as it can be used to identify issues at a quicker rate and focus the due diligence process, enabling both the buyer and seller to close a deal faster. It is important that a deal can be closed quickly for private equity firms, as record amount of dry powder available means that there is a lot more competition in the market.
6. Oil & Gas
As the oil & gas industry has strengthened in 2018 with a rise in commodity prices, costs and emerging technology the market is forecast to accelerate, with an expected global value of $2,627.4bn by the end of 2022, compared to $1,977.3bn in 2017.
This could make the industry an attractive prospect to private equity buyers although, that being said, oil & gas has always been a popular industry for private equity investment as it is a commodity that is always in demand, it produces a steady cash flow, there are high barriers to entry into the market, and it attracts strong profits.
While the medical industry has some crossover with healthcare, there is more of a focus on the area of medical devices, particularly within manufacturing and research. As innovative new drugs and devices are continually coming to market this is attractive for private equity. A recent acquisition in this sphere includes Mérieux Développement and Gimv’s acquisition of Stiplastics Healthcaring.
8. Construction/10. Engineering
While construction and engineering appeared in eighth and tenth places respectively, there has been an increased presence of private equity firms in the combined engineering and construction industry. While last year saw an increase in private equity exits, there was also an increase in acquisition activity.
One notable transaction in 2017 was that of Warburg Pincus’ acquisition of Service Logic. This acquisition is a key example of why private equity interest has increased as Service Logic is a HVAC and mechanical services provider, an area which private equity firms are eager to enter because of the recurring revenues available. There has been even more interest in recent years as the aftermarket is growing as a result of a need for it within the construction industry.
9. Transportation & Logistics
Private equity in the transportation & logistics industry has emerged as a large player since the 2008 financial crisis as it worked at consolidating a fragmented market and financing expansion. In 2014, there was a shift to publicly trading companies acquiring transportation & logistics companies, and private equity took advantage of a buyers’ market and sold. By 2015, however, private equity was back to being the main contender as spending slowed down from publicly traded companies due to their stock prices falling, whereas private equity had the necessary resources.
One such company that specialises in transportation & logistics acquisitions is Greenbriar Equity Group, with the majority of its current portfolio dating back to 2015. Some of its recent acquisitions include The Whitcraft Group (April 2017) and LaserShip (March 2018).
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