Spencer Tenney, CEO of M&A advisory firm Tenney Group, said the market for mergers and acquisitions in trucking is poised to stay robust, though could change in value and structure. This is due to high freight demand, capacity shortages and incentives to diversify, though rising interest rates could cause banks to be more conservative. Tenney said buyers will remain aggressive, just with different deal packages.
He added, “Don’t assume that there’s going to be a huge dive in value. I think what we’re going to see is just an evolution of structure, and how deals get done. But there’s going to be a ton of deals that get done.” Tenney believes business shifts caused by the pandemic changed how carriers view growth, and the role acquisitions can play. For example, diversifying to better weather turbulent markets. He said buyers and sellers will work around costs that don’t add value, and larger deals will have a lower ceiling. Tenney also sees a shift away from large fleets pursuing deals, and instead they may turn to complementary businesses. Spillover deals from last year will also occur, and carriers will be more selective in their deals to fit their strategic plans. Knight-Swift Transportation Holdings Inc. remains focused on acquisitions.
Since the 2017 [Knight-Swift] merger, we’ve invested $1.6 billion in acquisitions,” said Knight-Swift CEO David Jackson during the Jan. 26 earnings conference call. “M&A remains a high priority and our strong cash flow and leverage ratio of less than 1.0 provide ample capacity. Our balance sheet is strong, enabling us to invest in organic growth, pursue acquisitions, purchase shares, increase dividends, and pay down debt.
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