On the fast track
Few acquisitions that fleet executives may consider actually turn into deals because the companies have to match on many different levels. The same is true for businesses that supply technology to the transportation industry.
Technology is a fast-moving business. One reason why software companies are looking for opportunities to acquire similar businesses is to accelerate the release of new features and platforms to meet the changing needs of the marketplace. Acquisitions can provide immediate access to new revenue from current and prospective customers, especially as transportation companies expand the list of services they provide.
Last April at an industry conference, Marc Mitchell approached Tom McLeod with an opportunity to acquire the software company he founded, Enterprise Information Systems (EIS) in Downers Grove, Ill. After the first meeting, McLeod – chief executive officer and founder of McLeod Software – and Mitchell continued to explore the possibilities.
EIS developed the Transportation Solution Set (TSS), an enterprise management system for less-than-truckload carriers. The system included applications for rating, cross-dock scheduling, call center integration, mobile handsets and other features specific to LTL freight needs. But because of its size – EIS has 12 employees – the company found it difficult to gain traction among larger carriers even though its technology platform was capable of supporting carriers of all sizes.
In recent years, McLeod Software has expanded its dispatch and enterprise systems beyond truckload and brokerage operations as its customer base has continued to diversify its offerings. Several years ago, the company developed an LTL consolidation module for its truckload customers to use with the LoadMaster enterprise system. The module allows carriers to put two or more shipments on a single trailer, but it lacked some features particular to the LTL marketplace such as a rating engine.
Technology is a fast-moving business.
Last year, McLeod Software acquired iLENS to offer a freight management product to logistics providers and shippers. McLeod Software since has developed iLENS to include LTL freight management in terms of rating and optimizing shipments.
With the acquisition of EIS, McLeod Software now has an LTL enterprise system, allowing the company to enter the LTL marketplace and expand its footprint among carriers looking for a unified product platform on which to operate LTL, truckload and brokerage operations.
“On this basis, the acquisition of EIS was a strategic match,” McLeod says. “We are excited about the speed we are going to move into a market that is fairly underserved.” With the capability that EIS brings, McLeod Software also can extend new features and capabilities to its current truckload and brokerage customers, he says.
The strategic match goes beyond new sales and marketing opportunities. The Java-based applications EIS developed are nearly identical to McLeod Software’s LoadMaster and PowerBroker platforms in terms of technical compatibility, so the new LoadMaster LTL product won’t require conversion. McLeod Software also will be able to leverage its resources for new software development across all product lines.
“Both companies have the ability to share code within our products on day one, and there is no looming rewrite of the entire product by one side or the other to achieve our full synergy and offer a genuinely integrated application,” says Mitchell, who became product manager for LoadMaster LTL after the acquisition.
McLeod Software’s acquisition of EIS offers a good example of how acquisitions can speed development of new products to meet the fast-changing needs of transportation companies. n
Aaron huff is Senior Editor of Commercial Carrier Journal.
E-mail [email protected] or call (801) 754-4296.
