M&A experts forecast record deal volume for trucking in 2022

The number of mergers and acquisitions in 2022 could set a record—and there might be some surprising reasons that companies absorb other ones after several trends emerged last year, two experts with M&A broker Tenney Group said during a Jan. 27 webinar presented by the Truckload Carriers Association.

“I do think we’ll see record deal volume,” said Davis Looney, strategic adviser with Tenney Group, who predicted a 20% deal volume rise this year. He was joined by Spencer Tenney, president and CEO of Tenney Group. “I expect there will be a lot of headlines” about acquisitions, Looney added.

Tenney Group is an industry-specialized M&A advisory firm that has been dedicated to transportation and logistics since 1973. Tenney Group typically serves trucking companies with annual revenues ranging from $20 million to $300 million through sell-side representation services.

The truck driver shortage—estimated to be 80,000 right now and possibly headed toward 160,000 by the end of the decade—has become a driver of such deals industrywide, the webinar participants said.

“The talent war and inflation will drive companies to use acquisitions to specialize,” Tenney said. “We’ll see a major uptick in strategic-type acquisitions.”

“The key pain they’re trying to address is the driver shortage,” he said later in the webinar.

Looney added at one point: “We’re in a low-margin industry. There will be a major move to go out and buy talent. One of the stories I heard this year is everyone trying to figure out the driver recruitment issue.”

Also, list access to more used equipment—in the middle of an unprecedented ecommerce boom but also a shortage of new truck and trailer production because of component and supply shortages—as a catalyst for a lot of deal-making, he said.

The two Tenney Group executives also had some statistics that showed M&A activity booming in 2021 headed into 2022. Total transport and logistics deals increased 11% with a total deal value up 86%, according to PricewaterhouseCoopers statistics they cited.

Of the deals, 66% were strategic, meaning the companies wanted to expand, either into new but related businesses or in a segment they already occupied. Also of the deals, 83% were cash offers last year, up 68% in 2020, meaning M&As were getting done with more cash and in need of financing less.

There were big first-time buyers in the market, for example, Tenney said. Werner closed on a deal in July to acquire 80% of ECM Transport Group for $142 million, with an option to buy the remaining 20% of ECM within five years. It was Werner’s first-ever truckload sector acquisition.

These are some prominent mergers and acquisitions among fleets in the trucking the last few months covered by FleetOwner. Knight-Swift figured prominently in a lot of the deal-making:

Other notable 2021 deals, cited by Tenney, were:

The Tenney Group laid out anecdotal proof of the reasoning behind some of the deals, a lot of which involved employee well-being, from the participants in the M&A deals themselves:

“It is important to me to find the right ‘next’ home for my employees.”
“I want to see the business reach its full potential—through someone who wants to take the risks required.”
“We feel to attract the best talent and to keep it, we have to keep growing.”
“The buyer kept every one of my employees … and that was important to me.”
“We want to grow by 200% in the next five years—we expect acquisitions will play a key part in realizing that goal.”