As our nation emerges from a period of economic recession, rates of mergers and acquisitions are bound to increase. The ensuing race for survival may require some creative strategic planning, including the possibility of a mutually beneficial merger. When complementary companies join forces, the mere increase of size can help protect them from the harshest of impacts that often affects the smallest business the most. In addition to the size factor, well-planned mergers can benefit your transportation business by strengthening current weaknesses and providing new avenues for savings.
In determining whether a merger would benefit your transportation business, the following factors will all come into play.
Unlike organic growth, a merger typically brings almost instantaneous savings. This kind of expansion allows for increased income coupled with decreased costs. If you’re a smart business owner, you’ll be able to strategically advance your business, given ideal circumstances; those circumstances often accompany a merger.
A couple clear benefits include adding already trained drivers and expanding your fleet without having to shell out the time or capital such steps would typically require. The key is to target a business that has what you want, or need, and figure out what you have that they want, to bring to the table.
Especially for those trying to expand into a new aspect of the industry, the cost of attaining a new customer can be hard to swallow, especially if your business is small. When the competition fights back, you may find yourself unable to compete realistically for the clients you desire. For those attempting to break into a new market, a merger with a carrier who already serves the shippers you’re targeting can become your ideal means to achieving your goals.
Instead of spending valuable capital on advertising and attaining brokerage services, you can focus on your customers. Of course, the smoothness of the post-purchase transition period is key to retaining both companies’ customers. When your newly joined company appears stable, you’ll be able to establish yourself in your newly expanded territory and reach out to even more new customers.
Of the mergers that fail within their first few years, the most common reason cited for the breakup is a style or culture clash. Even though combining forces may have looked great on paper, a merger includes more than crunching numbers. Just like people typically have relationship struggles when they have divergent views regarding value systems and philosophies, companies will have trouble working together as one if they aren’t united on some key ideas and practices. Taking the time to understand one another’s long-term goals and premises before the merger can go a long way toward preventing a merger that’s doomed for failure. Another way to help prevent unnecessary post-merger problems is to go about major changes slowly, over time.
Business brokers such as The Tenney Group can be invaluable assets as you consider a merger with another transportation business. They provide the confidentiality and experience you need to help initiate and negotiate a mutually agreeable merger that’s destined for success.