ACWI | Volume 3, Issue 21 | November 15, 2015
Sun-Maid Growers of California has selected PRISM Team Services to handle distribution of its products throughout Northern California and parts of Nevada and Utah.
A member of the American Chain of Warehouses Inc., PRISM’ is headquartered in Danville, CA.
“After looking, not only at economics, but at the best fit for Sun-Maid, PRISM was the obvious choice,” said John Slinkard, Vice President Customer & Supply Chain Services at Sun-Maid Growers of California.
“We look for companies that operate as we do. Sun-Maid is a cooperative of raisin growers, with a mentality very much like a family-owned company. Relationships are critically important and we’re very big on service,” he added.
Most Companies Plan To Invest in Big Data
Investment in big data continues to increase in 2015, but not as rapidly as in previous years. More than three-quarters of companies are investing or planning to invest in big data in the next two years, a 3% increase over 2014, according to a recent survey of IT and business leaders by Gartner, Inc..
“This year begins the shift of big data away from a topic unto itself, and toward standard practices,” said Nick Heudecker, research director at Gartner.
“The topics that formerly defined big data, such as massive data volumes, disparate data sources and new technologies are becoming familiar as big data solutions become mainstream. For example, among companies that have invested in big data technology, 70% are analyzing or planning to analyze location data, and 64% free-form text.”
As in previous years, firms are overwhelmingly targeting enhanced customer experience as the primary goal of big data projects (64%). Process efficiency and more-targeted marketing are now tied at 47%. Enhanced security capabilities saw the largest increase, from 15% to 23%.
“As big data becomes the new normal, information and analytics leaders are shifting focus from hype to finding value,” said Lisa Kart, Gartner research director.
Buyers Choosy Even in an M&A Wave
Are you thinking that this might be a good time to cash out by selling your warehouse-based third-party logistics company or to seek an injection of private equity financing for expansion?
You could be right, but be careful that you’re not laboring under common misperceptions, warned major players in the finance world who spoke at the third annual Value Creation Forum held last month in Chicago, by Armstrong & Associates and Infocast.
In recent years the pace of mergers and acquisitions in the 3PL sector has accelerated sharply, with headlines proclaiming yet another major transaction almost every week.
You would be surprised to learn how many uncounted others took place below the radar involving smaller companies – primarily freight brokers and other small 3PL intermediaries, as well as warehouse and trucking operations.
Size is not necessarily an obstacle. Some the M&A specialists and 3PL companies looking to expand their portfolio said they are willing to work with companies that have only $5 million in annual revenues – in some cases as low as $3 million.
But the trick is having something they want to buy. A crucial element is an established track record of net earnings growth. Frank Mountcastle III, managing director of Harris Williams & Co. said that for a company with $10-15 million buyers are looking for at least 15% in organic growth.
Another is being a solid niche player specializing in serving a growing industry segment. Trying to be all things to all people is guaranteed to make a 3PL warehouse operation less attractive to buyers.
While some buyers are seeking to acquire additional capacity, “the truth is that buyers are looking for differentiation in the market,” said Robert Levin, managing director of Republic Partners.
Being small is not necessarily a drawback. Sean Coakley, senior vice president of Kenco Group said, “Smaller and family-owned warehouse companies allow flexibility in deal making and can deliver hand holding and provide closer customer services.”
The most common reason for selling a company is that the owner wants to cash out and retire, and as quickly as possible once they’ve made that decision. But the trajectory of a typical transaction usually takes about six months from the start of negotiations to the time the money hits your account.
A complicating factor is that buyers are looking for strength and continuity in top management. The common expectation is that the CEO will stay on for a few years to helm the operation.