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Why M&A Is the Right Option to
Capitalize on Growth Opportunities
in the Freight and Logistics Industry
Contents
1. Executive Summary
4
2. Why M&A—and Why Now?
5
3. M&A Market Observations 6
4.Where Does the Industry Go From Here?
8
5.Developing the Right M&A Strategy Is Key
11
6.Building Robust M&A Capabilities
Is Critical to Execution
12
7.Conclusion
13
8. End Notes
14
9.About the Authors
15
3
Executive Summary
Following years of clear focus on cost reduction, freight and logistics (F&L)
companies again are setting their sight on growth. Given that companies have
aggressive growth targets that are difficult to achieve quickly in the current
economic environment, it is likely that not all of this growth will be organic.
Research conducted by Accenture has found that F&L companies were active users
of M&A in the past decade and that M&A is becoming a particularly important
tool for F&L companies to address their growth challenges.
In fact, after a marked decrease in
investment activity in the F&L industry1 in
the wake of the global economic
downturn, M&A activity is regaining
momentum and mega-mergers such as
UPS –TNT Express are returning to the
stage. Our empirical study shows that
M&A activity in the past 10 years was
strongly driven by regional consolidation
movements by global carriers, forwarders
and 3PLs aimed at increasing market
penetration. The data provides some early
indications that F&L companies’ deal
rationales are starting to shift.
4
In Accenture’s view, these are a mere
starting point. We have identified four key
M&A trends that likely will unfold across
the F&L industry in the next several years:
1.Consolidation is likely to continue
because the F&L market remains highly
fragmented.
2.The aspiration to attain a strong
position near rapidly growing markets is
likely to fuel M&A activity in emerging
markets.
3.China’s quest to quickly become an
influential F&L player is expected to
increase competition for potential
Chinese targets, especially for those
with favorable inland accessibility.
4.Specialist providers will become
increasingly attractive targets for
freight forwarders and contract logistic
companies pursuing growth in verticals
or complementary growth in value
adding services.
To capitalize on available M&A
opportunities, F&L companies need to
confirm they have the right M&A strategy
in place to guide their efforts—a strategy
that is the result of close examination of
how M&A can explicitly help the company
achieve its broader strategic goals and in
which situations M&A is the best option
over organic and other inorganic
initiatives. They also should be sure they
have the capabilities necessary to
successfully execute the deals they
strike—especially those related to
identifying, screening and prioritizing
targets, conducting due diligence, and
planning and executing the integration of
merging organizations, which Accenture
has identified as particularly critical to
M&A effectiveness.
In the remainder of this paper, we explore
these M&A trends in more detail and
provide some guidance on steps F&L
companies can take to position
themselves to capitalize on inorganic
growth opportunities in the next several
years.
Why M&A—and Why Now?
After years of clear focus on cost reduction and performance improvement F&L
companies are again actively pursuing their growth agendas and are evaluating
inorganic growth options to achieve their financial targets. For an increasing
number of F&L companies, M&A are a critical part of the solution.
F&L companies as a group have set
aggressive financial goals for top-line
growth, with many of the key industry
players having communicated doubledigit growth targets to the capital
markets. Yet the economic climate
remains challenging and the environment
for organic growth is competitive. Thus,
F&L companies must develop a compelling
and credible value-creation agenda that
will convince investor communities they
have the right vision and plan for growth.
At the same time, F&L companies seek to
improve their margins, something that is
difficult to achieve in today’s low-growth
economic environments. The challenge is
exacerbated by growing cost pressures
from competition and increasingly
demanding customers.
Recognizing organic growth might not be
sufficient to achieve their goals and honor
their commitments made to capital
markets, executives at F&L companies
increasingly view inorganic growth as
critical part of the solution.
In pursuing inorganic growth, companies
typically have three routes available to
them: joint ventures (JVs), strategic
alliances, and M&A. Each has its
advantages and disadvantages, and the
appropriateness of each varies by context.
JV and alliance arrangements usually trade
full ownership and control for lower risk
and capital requirements. They represent a
valid growth option, especially in times of
higher economic uncertainty. Also, JVs and
alliances with local companies can be the
sole route of entry into promising but
highly regulated emerging markets. India,
for instance, prohibits foreign ownership
of most businesses.
Figure 1. Deal count and average deal size
76
69
68
55
38
25
56
42
30
27
13
Ø Deal
Size ($m)
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011 2012 Q1
428
1,231
378
990
402
412
550
1,725
763
380
Thus, market entry must be achieved
by teaming up with a local partner.
In the current economic climate, M&A
is the most relevant and increasingly
attractive option for F&L companies to
pursue inorganic growth for a number of
reasons. First, some major F&L companies
have accumulated significant cash in the
past four years that they could readily
deploy to purchase new growth-generating
assets. Second, ongoing deregulation in
emerging growth markets has made it
easier to execute M&A deals in those
markets. Third, the global F&L market
remains highly fragmented, thus providing
opportunities for further consolidation,
especially for cash-rich players looking to
use M&A to grow or diversify to achieve a
competitive edge. Fourth, there are ample
vertical industry opportunities, where loose
and potentially unstable JVs and alliances
might not deliver the degree of exposure
and expertise transfer envisioned.
870
In fact, M&A activity in the F&L industry,
which closely tracks the overall economic
growth cycle, is regaining momentum
with the improved global economy. As
shown in Figure 1, M&A in the F&L
industry2 grew steadily at the beginning
of the new millennium, reaching a peak in
2008. Deal activity declined significantly
in the wake of the global financial crisis
and subsequent recession, but still
remained above 2003 levels. Markedly
reduced deal values in 2011 underpinned
F&L acquirers’ cautiousness in response to
an overall cloudy macroeconomic climate
at the time, but those sentiments have
given way to a more positive outlook in
2012. The announcement of the US $6.8
billion acquisition of TNT Express by UPS
in March 2012 provides evidence that
megadeals, in fact, can regain prominence.
5
M&A Market Observations
Our analysis of F&L M&A transactions larger than $100 million in the past 10
years2 has revealed some interesting changes in M&A deal making. First, in terms
of geographical scope, M&A activity has shifted away from Europe and the US
toward emerging growth markets in Asia Pacific and South America. We also found
a growing tendency to “go local” in M&A transactions in recent years. Second, in
terms of acquisition rationale, historical M&A activity was largely driven by
consolidation movements. We are seeing some indications that acquisition
rationales in some sub-segments are starting to move beyond consolidation.
Geographic Scope: Asian M&A activity
and domestic deal making on the rise
It is no secret that the emerging markets
of Asia and South America have replaced
the more developed economies of Western
Europe and North America as targets for
many companies’ growth initiatives. The
F&L industry is no exception. M&A activity
in Asia Pacific and South America hit a
record high in 2010 on both the buying
and the selling side.
Today, more than 56 percent of M&A
deals are targeted at companies from
these regions.
However, unlike in other industries where
emerging-market deals are often initiated
by companies from mature markets, F&L
companies largely have eschewed
international expansion in recent years.
Nearly eight in 10 deals executed in the
F&L industry in 2011 and through the first
quarter of 2012 have been domestic3 in
nature (driven largely by increased M&A
activity in the Asia Pacific region and
Asian acquirers’ preference for targets
within domestic markets). This is a sharp
increase from 2007 and 2008, when a
slight majority of all deals done in the
industry were cross-border transactions.
Figure 2. Inbound vs. outbound M&A investments 2002-Q1 2012 (in US$ millions)4
Target Nation
Europe
Total Invest 2002-Q1 2012
- t/o 2009-Q1 2012
Ø Deal Size
Min. Deal Size
Max. Deal Size
Acquirer Nations
North America
Total Invest 2002-Q1 2012
- t/o 2009-Q1 2012
Ø Deal Size
Min. Deal Size
Max. Deal Size
Asia Pacific
Total Invest 2002-Q1 2012
- t/o 2009-Q1 2012
Ø Deal Size
Min. Deal Size
Max. Deal Size
Central & South America
Total Invest 2002-Q1 2012
- t/o 2009-Q1 2012
Ø Deal Size
Min. Deal Size
Max. Deal Size
Middle East/Africa
Total Invest 2002-Q1 2012
- t/o 2009-Q1 2012
Ø Deal Size
Min. Deal Size
Max. Deal Size
© 2012 Accenture. All rights reserved.
6
Europe
North America
Asia Pacific
Central & South
America
Middle East /
Africa
62,804
11,737
604
101
9,849
6,625
1,300
828
305
2,245
1,175
235
100
514
195
195
195
195
856
587
428
269
587
9,368
7,377*
1,338
234
6,832
32,951
3,422
701
103
6,221
646
215
100
400
1,256
128
314
128
662
-
1,860
1,591
310
101
839
1,153
384
150
850
29,077
8,619
378
101
4,554
1,188
985
297
100
719
-
5,245
507
583
107
1,628
-
161
161
161
161
161
5,673
4,787
709
156
3,425
-
150
150
150
150
150
-
-
1,542
129
385
124
1,104
* Includes the nearly $7 billion UPS-TNT deal
On average across all geographies during
that 10-year span, 62 percent of M&A
deals in the F&L industry involved an
acquirer and target from the same
country, while 38 percent were crosscountry deals.
Analyzing F&L M&A activity on a regional
level shows an even clearer picture: The
past ten years were all about regional
consolidation (Figure 2). Acquirers from
all different regions made the bulk of
M&A investments acquiring targets from
their home region. In terms of overall
M&A investment, European F&L acquirers
were by far the most active deal makers
(US$ 72 billion). Overall M&A investment
volume by Asian Pacific acquirers was
considerably lower than by US acquirers
(US$ 33 billion vs. US$ 44 billion).
However, in direct contrast to their US
and European counterparts, they made a
much a higher proportion of their total
M&A investment within the past three
years (34 percent vs. 25 percent vs. 19
percent).
Figure 3. M&A rationales by industry sub-segment4,5
Air
32%
64%
Ocean
56%
Rail
37%
Road
52%
Mail
12%
Express
5%
14%
22%
Contract
Logistics
From a sub-segment perspective, we
found differing rationales for M&A—both
those transactions already executed and
those projected for the future. We found
ocean carriers and road carriers tended to
focus more on consolidating within their
sub-segments, while other segments—
especially freight forwarding (FF) and
contract logistics (CL)—tended to further
blur the boundaries between the segments
and use M&A to acquire capabilities that
enable them to offer end-to-end supply
chain solutions (Figure 3).
42%
19
24%
30%
35%
22%
18%
17
18%
17
26%
14%
Intra Segment
21
23
30%
Intra Industry
37
Cross Industry
© 2012 Accenture. All rights reserved.
100%
Figure 4. M&A deal rationales by industry sub-segment and over time6
High
Diversication
Market Penetration
Geographic Proximity
FF
CL
Air
Air
Mail
FF
Road
CL
Ocean
Rail
Mail
Express Ocean
Road
Express
Diversication in New Markets
Low
Geographic Expansion
Business Similarity
Low
2002-2007
Deal Rationale: Consolidation
and beyond
133
35%
22%
Intra Sub-segment
40%
23%
18%
Rail
American F&L companies have been most
active in investing abroad, followed by
those in Asia Pacific, Europe and Africa /
Middle East. In terms of average deal size,
Asian Pacific acquirers tend to be more
cautious and primarily look for targets in
the US$ 300 million range. American and
European acquirers, in turn, have executed
some larger acquisitions in equally mature
markets as well. They also have adopted a
more conservative M&A approach when
investing in Asia Pacific.
10%
47%
29%
Freight
Forwarding
16%
47
High
2008-2011
© 2012 Accenture. All rights reserved.
In breaking down this data by time frames,
we found that, following years of strong
consolidation focus before the financial
crisis and recession, there are indications
that acquisition rationales in some subsegments are starting to shift.
freight forwarders, which are going “asset
heavy” in Asia) and geographic expansion
(in particular, express carriers, which are
further emphasizing expanding their
global scale, as the UPS-TNT deal
illustrates).
As shown in Figure 4, M&A activities in
most segments between 2002 and 2007
were strongly focused on either
consolidation or on further penetrating
existing markets. Recently, however, it
appears several sub-segments are making
a play for diversification (especially
7
Where Does the Industry Go From Here?
With the preceding historical analysis as a backdrop, we present what we see are
the four key M&A trends emerging in the F&L industry. Considered together, these
trends paint a picture of an industry that is moving toward greater consolidation—
particularly in the fast-growing emerging economies in Asia—as major players seek
to add capabilities that enable them to offer a broader set of higher-margin
services to an expanding global customer base.
1. Consolidation is likely to continue
because the F&L market remains highly
fragmented.
The F&L industry historically has been
highly fragmented and remains so today,
despite the recent spate of M&A activity.
Thus, increasing consolidation seems likely
both among asset-heavy and asset-light
players. In particular, we expect to see
pronounced consolidation moves among
asset owners in ocean freight, due to
existing overcapacity on developed trade
lanes and poor returns for financial
investors. In freight forwarding and
contract logistics, we may well see a
large number of horizontal acquisitions
targeted at companies with capabilities
in complementary industry verticals.
Geographically speaking, national
consolidation opportunities in some
segments are more constrained in mature
markets, which could result in more
pronounced cross-border or cross-regional
M&A activity. This would reverse the trend
we have seen in the past few years, when
domestic deals dominated the landscape.
8
2. The aspiration to attain a strong
position near rapidly growing markets
is likely to fuel M&A activity in
emerging markets.
Ongoing industrialization of markets,
continued manufacturing offshoring
to “new” emerging countries, and rising
domestic consumer demand will create
a high cargo demand profile for top
emerging markets for at least the
forthcoming decade. Thus, we expect to
see particularly high M&A activity among
freight forwarders and contract logistics
providers from developed markets
targeting big Asian consumer markets
as they seek to:
•Acquire knowledge of local customer
requirements and a strong Asian
platform
•Boost their market share on Asian
emerging-market trade lanes
•Anticipate and take advantage of
customer movements to shift
production and sourcing decisionmaking power toward Asia, as well as
supplier migration toward those
markets
•Capitalize on massively promising
growth prospects for contract logistics
in these underpenetrated markets.
However, while most of the focus is on
large Asian economies, good connectivity
to global markets and relatively low
barriers to market entry also make smaller
emerging markets in Asia (such as
Malaysia, Indonesia, Thailand, and
Vietnam), South America (including Chile
and Mexico), and the Middle East
(especially the United Arab Emirates)
valuable prospects for M&A deals.
While there are ample opportunities for
F&L companies to strengthen their
footprint in emerging markets, it is critical
to invest in the “right” trade lanes in
terms of shipper and commodity mix and
margins appropriate to the individual
business.
3. China’s quest to quickly become an
influential F&L player is expected to
increase competition for potential
Chinese targets, especially for those
with favorable inland accessibility.
Although China in 2005 opened up its F&L
industry to wholly owned foreign
enterprises, the country’s logistics industry
is still highly fragmented and likely to
move toward major consolidation and
formation of large consortiums in next
few years. However, it is not a given
that movement will be driven mainly by
foreign firms. In fact, our analysis shows
that only a small percentage of deals done
in China since 2008 have been crossborder transactions (Figure 5).
As domestic policies and manufacturing
companies shift the location of
manufacturing bases to inland locales,
and as the need to develop comprehensive
domestic networks becomes imperative,
we expect to see increasing competition
for targets in areas with most favorable
accessibility. Competition for remote
targets is further fostered by governmental
investments into logistics infrastructure
development (such as railways, roads and
highways).
But with the Chinese government currently
actively supporting consolidation (as
evidenced by the significant M&A
involvement of state-owned companies,
passage of financial stimulus packages,
and growing investment in logistics
infrastructure), domestic buyers will quickly
grow larger and become more assertive
deal makers. That means foreign F&L
companies will have to move even faster
if they want to buy their way into the
Chinese growth market.
4. Specialist providers will become
increasingly attractive targets for
freight forwarders and contract logistics
companies pursuing growth in verticals
or complementary growth in valueadding services.
A growing number of freight carriers and
integrators is entering the freight
forwarding and contract logistics market
(including DHL, FedEx, UPS, and SCNF),
thus further increasing competition and
commoditizing the already low-margin
forwarding business.
To excel in this highly competitive
industry, companies will need to create
industry-specific solutions to win new
business and cross-sell to existing clients,
and especially to get access to the highermargin logistics business areas. F&L
players have begun looking for sources
of diversified revenue growth through
capability purchases in previously
separate or adjacent industries.
Accenture increasingly views these
capability acquisitions as a critical
component to increase industry specificity
of services and as a key driver of
innovation in F&L business models. We
believe freight forwarders and contract
logistic companies will increasingly look
for adequate specialist providers to move
toward “end-to-end” supply chain
solutions (by filling gaps in current supply
chain coverage or by increasing the depth
of value adding services for certain
verticals).
The most obvious industry for this
emerging M&A category is probably oil
and gas. Some evidence already exists
that ocean carriers are considering
diversifying into the oil and gas drilling
business, or acquiring engineering services
companies to offer additional solutions to
oil and gas clients. However, other
industry verticals including automotive,
high-tech and retail might offer similarly
attractive opportunities. For instance, a
contract logistics company may decide to
extend its capabilities to offer its hightech companies pick-up and repair
services, or help its pharmaceutical
company clients manage the complex
certifications related to shipments of
drug compounds, or to seamlessly manage
reverse logistics and recalls for drug
and aviation companies.
Figure 5. Cross-border vs. domestic M&A deals in China since 2005
12
+32%
83%
6
5
3
2
100%
2006
Domestic deals
100%
80%
100%
100%
2007
3
20%
2008
2009
2010
17%
2011
Cross-border deals
© 2012 Accenture. All rights reserved.
9
10
Developing the Right M&A Strategy Is Key
Given the current and anticipated dynamics in the F&L industry and overall global
economy, F&L companies should confirm they have a robust M&A strategy that
articulates how and why they will approach M&A. Such a strategy will help F&L
companies target M&A deals that strongly contribute to their near- and long-term
pursuit of overall corporate objectives and to fulfill their commitments to investors.
A thoughtful M&A strategy is critical for
several reasons. First, it provides a
formalized roadmap for a company’s
inorganic growth agenda and helps
provide stakeholders with a clear
understanding of the M&A purpose.
Second, it supports alignment among the
management team, board of directors,
and investors on such critical M&A issues
as stakeholder risk tolerance and
expectations. Third, it provides a
framework for M&A deal execution,
especially for target screening and
evaluation.
Importantly, an M&A strategy should not
exist in a vacuum. Rather it should begin
with an understanding of the key sources
of strategic value and a confirmation of
the principal directives in the overall
corporate strategy. In essence, these
directives address the markets in which
the company wants to operate in the
future; which products or services the
company wants to offer; in which
geographies the company wants to
operate; and which customers the
company wants to serve.
The confirmation of directives helps
reconfirm where a company is today and
where it wants to go in the future. It
requires a review of strategic needs and
visions along the four dimensions covered
by the directives and identification and
evaluation of strategic gaps to current
business. This task is far from trivial given
the high degree of complexity and
interrelatedness of decisions potentially to
be made. A decision to pursue a direction
on one of the strategic directives
necessarily influences what a company
would do on the other three and therefore
requires unequivocal clarity of corporate
strategic direction among executive
decision makers.
M&A strategy also is heavily influenced by
a number of factors that might hinder or
help its execution of the corporate
strategy. External factors such as market
environment and conditions, the
competitive landscape, regulatory
requirements, and entry barriers, as well
as internal factors including risk
tolerance, financial objectives, and
availability of appropriate cash, people
and capabilities, all can greatly influence
where, when and how companies execute
deals.
Consider a hypothetical example of a pure
air cargo company, which would like to
expand into end-to-end logistics
solutions—i.e., offering full origin-todestination services: pick up and delivery,
pre-/defeeding and associated document
management complementing pure air
cargo transport. Doing so would change
the company’s product offerings, and also
could affect its geographical reach and
target customer base. Thus, a company
must understand what is most important
given its corporate strategy and where it
wants to grow in the future—for instance,
to evolve into a provider of end-to-end
logistics solutions, become more of an
international player instead of a regional
operator or extend its reach into industry
verticals it already serves or add a new
vertical to its mix.
determine whether gaps are best closed
by internal or external means. The most
important decision criteria are required
speed and investment, risk and certainty
of outcome, ability to execute and effect
on balance sheet.
Consider the previously mentioned
example: If the air cargo company decided
that it wanted to evolve into a provider of
end-to-end logistics solutions for global
clients, the build-partner-buy analysis
might conclude the company should use
M&A to acquire the necessary assets,
technology, expertise and other
capabilities. The company could do this
organically; however, creating a global
capability from scratch, even when
limiting the scope to major trade lanes,
would be extremely time consuming and
costly and fraught with potential risk.
Conversely, if the company was looking
for a less-expensive solution, such as an
end-to-end logistics solution for one
vertical on one or two trade lanes, an
organic option might turn out to be the
preferred avenue for the company due to
its economic and operational feasibility
and lower invest requirements.
Having answered the question on where
to grow, the company then can
understand and evaluate how it wants
achieve this growth. This involves a
thorough evaluation of the different
organic and inorganic deployment options
that could help it close strategic gaps.
Companies should map out “buildpartner-buy” options for each gap along
the four directives, as well as respective
advantages and disadvantages, to
11
Building Robust M&A Capabilities Is Critical
to Execution
Once it has developed its M&A strategy, a company should confirm it has the right
capabilities in place to effectively execute the strategy. Accenture has identified
three main drivers of M&A success: value-driven target screening, thorough due
diligence and effective merger integration.
Target screening
Accenture has found that a value-driven
rather than purely financial approach for
identifying and screening acquisition
targets or merger partners delivers the
best results. This approach includes
screening criteria that are directly linked
to M&A strategy to assess whether the
deal will fill strategic gaps, as well as
frameworks to identify and quantify the
expected value from an acquisition or
merger. Using such an approach, a
company can evaluate and prioritize
candidates based on their strategic
rationale, synergistic value and the
likelihood of getting the deal done.
Due diligence
A key activity in any M&A deal is the due
diligence. A focused yet thorough due
diligence is vital in helping companies
understand what they are buying—and in
creating the right strategies to obtain the
desired value from the deal. A company
should follow a holistic approach to
strategic and operational due diligence,
one that focuses not only on validating
acquisition assumptions, but also on
providing greater insights that enable it to
proceed confidently with subsequent
integration activities. The approach should
enable the company to identify and
estimate the impact of synergies as well
as uncover potential destroyers of
synergies and other risks.
Merger integration
While choosing the right acquisition
targets and quickly identifying sources of
value are critical, effectively integrating
these acquisitions into the enterprise may
be the single most important M&A
success factor. In our extensive work with
clients around the world, Accenture has
12
found several factors are key to merger
integration success.
Jump-starting integration activities.
Successful acquirers often begin work
well before deal announcement, preparing
their integration program structure,
establishing integration teams with welldefined charters and scopes, and planning
for day one of the merger and beyond.
Focusing on value creation, not just
integration. Seasoned acquirers also focus
on the areas that will create the most
value, structuring the integration program
around those key value drivers and
ensuring each receives adequate focus
and resources. Additionally, they
emphasize the customer throughout the
integration process, and are particularly
mindful of retaining key customers.
Addressing potential cultural issues
early. Savvy acquirers gain an
understanding of any potential cultural
issues by developing blueprints of the
merging organizations, and then tailoring
the integration and communications
programs to mitigate and address key
differences and potential clashes.
Ensuring comprehensive, frequent and
consistent communications. A company
should develop a detailed, integrated
communications plan for each key
stakeholder group and implement it
immediately after the merger
announcement.
Providing strong governance and tight
process controls. The most successful
mergers are characterized by a strong,
centralized program management
function that coordinates decentralized
teams and provides common tools and
processes, risk management oversight and
management reporting to keep executive
teams up to date on progress while
allowing the line organization to continue
to focus on the day-to-day business.
Maximizing synergy opportunities. A
company should capitalize fully on
synergy opportunities by tying all
potential synergies to specific execution
plans. However, because time and
capacity for change are not unlimited, it
should focus on an 80 percent level of
certainty and comfort in planning and
then drive quickly for 100 percent
execution.
Moving quickly to implement bold
changes. Because mergers create the
expectation of change among employees,
management teams can be bolder about
the type and size of changes they make to
operating models, portfolio, channels and
other aspects of the business. But they
must work fast, as the window for such
change typically is only 18 to 24 months.
The preceding M&A capabilities are
especially critical in the F&L industry.
In Accenture’s experience, some F&L
companies truly understand that M&A
does not create value per se, but rather,
that value is generated by how well
thought-out deals are and how well they
are executed and integrated. These firms
are able to realize the expected synergies
from their transactions and accompanying
increases in shareholder value. Those that
fail to execute and integrate deals will end
up with significant cost and headcount
redundancies and acquisitions that do not
help them fulfill their obligations to
investors.
Conclusion
With growth on the executive agenda at
most companies around the world, F&L
companies face a considerable challenge:
identifying how and where to capture
growth to satisfy investors’ expectations.
They could move into new markets or
segments, choose to serve a new customer
base, decide to augment their product or
service portfolio, or expand into new
geographies. All of these actions are
potentially viable, and could help F&L
companies gain access to new revenuegenerating “white spaces” that would
complement their existing core markets
and offerings.
In many cases, though, organically making
these moves would be impractical.
Building the necessary assets, technology,
expertise and other capabilities to, for
instance, expand into a fast-growing
emerging market or evolve from a air
carrier to an end-to-end supply chain
solution provider would be too time
consuming, costly and risky for the vast
majority of F&L companies. Furthermore,
JVs and alliances, with their oftencomplicated relationships and issues
relating to control, are no longer the sole
route into core emerging markets due to
the willingness of governments in those
countries to increasingly accept foreign
ownership of local companies.
The key to success in this endeavor is
having a robust M&A strategy that clearly
articulates how M&A supports the
company’s overall corporate strategy, as
well as the capabilities necessary to
execute M&A deals in a way that
minimizes risk and maximizes speed and
returns. Without both of these elements, a
F&L company is at risk of, at best, not
fully capitalizing on the growth
opportunities before it and, at worst,
being left behind as more able
competitors make their moves.
That is why we expect M&A to become an
increasingly important component of F&L
companies’ growth agenda. With
sufficient cash on hand, F&L companies
are in a favorable position to strategically
acquire what they need to quickly build a
profitable business in a new market,
customer segment or geography.
13
End Notes
1) The freight and logistics industry comprises firms engaged in the supply of services relating to the movement, storage and handling of freight. According to
Accenture’s definition, it contains the segments freight transportation (air, ocean, rail and road), mail and express, and freight forwarding and contract logistics.
2) Our analysis is based on Thomson Reuters M&A data. The dataset includes all transactions greater than US $100 million, announced and completed between
January 1, 2002, and March 31, 2012 (Q1). To derive this F&L-focused M&A dataset, we have created a subsample by manually categorizing all acquirers and targets
into F&L segments based on case-by-case analysis of companies’ profiles. In cases where companies are active in more than one segment, the primary segment, i.e.
the one with the highest proportionate revenue share, is decisive. Equity carve-outs, exchange offer and open-market repurchases are excluded. Deal value excluding
net debt of target. Data was retrieved December 21, 2011, and April 16, 2012.
3) Domestic deals are deals in which acquirer and target are located in the same country. Cross-country deals are deals in which acquirer and target are located in
different countries.
4) Analysis includes all deals in which the acquirer is an F&L company.
5) Intra sub-segment deals are deals in which acquirer and target operate within the same sub-segment, e.g. freight forwarder acquirers another freight forwarder.
Intra segment deals are deals in which acquirer and target operate within the same segment, e.g. freight: ocean carrier acquires rail cargo carrier. Intra industry deals
are deals in which acquirer and target are both F&L companies, e.g. freight forwarder acquires trucking company. Cross industry deals are deals in which the acquirer
is a F&L company and the target is active in another industry.
6 )Business similarity measures how similar the target’s and the acquirer’s businesses are. HIGH= intra sub-segment deal; MEDIUM - HIGH = intra segment deal;
MEDIUM = intra industry deal; LOW = Cross industry deal. Geographic proximity measures the geographic proximity between acquirer and target. HIGH = Domestic
deal; MEDIUM = deal in which acquirer and target are located in the same geographical region, e.g. Europe; LOW = deal in which acquirer and target are located in
different geographical regions, e.g. North American acquirer and European target. All values are arithmetic means.
This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice
or further details on any matters referred to, please contact your Accenture representative.
14
About the Authors
Mirko Dier is an executive partner and
leads Accenture’s Global M&A practice.
Mr Dier joined Accenture in 1995 and
works with leading clients particularly in
the Resources industry with a focus on
corporate strategy, M&A, merger
integration and business transformation.
He holds a master’s degree in business
administration and an executive master of
business administration degree from
Kellogg. He is based in Munich.
Jörg Junghanns is a senior manager based
in Germany and an executive member in
Accenture’s Freight & Logistics core team.
In the past ten years, he has worked on
international assignments with
transportation and logistics companies,
primarily around strategy and process
execution. Mr. Junghanns holds a diploma
degree in international business
management.
[email protected]
[email protected]
Michael Sturm is an executive partner and
leads Accenture’s management consulting
business for Air, Freight & Logistics and
Travel. Mr. Sturm joined Accenture in
1996 and works with leading clients in
travel and transportation. He holds a
master’s degree in business
administration. He is based in Munich.
Dr. Sarah Ali is a Munich-based senior
consultant in Accenture’s Global M&A
practice with several years of
international consulting experience.
During her career she has worked on
several M&A, joint venture and alliance
engagements. Her industry focus is freight
& logistics. She holds a diploma degree in
business administration as well as a Ph.D.
in finance.
[email protected]
[email protected]
The authors would like to thank Adriana
Diener, Rob Knigge, Brooks Bentz, Seb
Hoyle and Kathrin Graser for their
contributions to this article.
About Accenture
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