Driven by a combination of strategic expansions, market consolidation, operational, financial and regulatory factors, mergers and acquisitions in the trucking industry foster growth and value. But according to the Harvard Business Review, between 70-90% of acquisitions either fail or underdeliver.
“If you’re going to do an acquisition, you better make sure you know what you’re going after,” Murray Mullen, chair, senior executive office and president of Mullen Group, said during a panel on Monday morning at the Truckload Carriers Association annual convention in Nashville.
Having made several acquisitions over the years, Mullen admitted he’s made mistakes when he didn’t “do my homework,” and that it was when he was focusing only on growth benefits, rather than keeping strategy in mind. He said that carriers need to make sure their acquisition strategy is right, along with the timing of the acquisition.
With a lot of opportunities in the market, Mullen pointed out carriers need to have a long-term strategy. “Unfortunately, in this market, with interest rates so high, it’s really complicated to do acquisitions right now. The bid/ask is okay, but the cost of doing it is not,” Mullen said.
Merging companies often involves distinct organizational cultures. Bridging differences, aligning values and fostering collaboration is essential for successful post-merger integration.
Jim Richards, president and CEO of KLLM Transport Services, disagrees that it’s the market for acquisitions now, emphasizing on fortifying the culture they have cultivated. “We’re a very picky eater when it comes acquisitions,” he said. “We’re very careful with the culture that we have built, especially from a safety standpoint. The last thing you would want to do is introduce a bad actor into your culture.”
With three acquisitions over the years and having passed on “around a thousand” of opportunities, Richards said KLLM's strategy has been successful since a crucial factor they looked at is the culture fit. “You can get yourself into a real bind if the culture doesn’t match up,” he said.
