Login



For PLUS+ subscription assistance, contact customer service.

Not a PLUS+ Subscriber?

Become a PLUS+ Subscriber today and you'll get access to all Supply Chain Management Review premium content including:

  • Full Web Access
  • 7 Magazine Issues per Year
  • Companion Digital Editions
  • Digital Edition Archives
  • Bonus Email Newsletters

Subscribe Today!

Premium access to exclusive online content, companion digital editions, magazine issues and email newsletters.

Subscribe Now.


Become a PLUS+ subscriber and you'll get access to all Supply Chain Management Review premium content including:

  • Full Web Access. All feature articles, bonus reports and industry research through scmr.com.

  • 7 Magazine Issues per year of Supply Chain Management Review magazine.

  • Companion Digital Editions. Searchable replicas of each magazine issue. Read them in any web browser. Delivered by email faster than printed issues.

  • Digital Editions Archives. Every article, every chart and every table as it appeared in the magazine for all archive issues back to 2009.

  • Bonus email newsletters. Add convenient weekly and monthly email newsletters to your subscription to keep your finger on the pulse of the industry.

PLUS+ subscriptions start as low as $109/year*. Begin yours now.
That's less than $0.36 per day for access to information that you can use year-round to better manage your entire global supply chain.

For assistance with your PLUS+ subscription, contact customer service.

* Prices higher for subscriptions outside the USA.

PLUS+ Customer Service Support


Customer service for all PLUS+ subscribers is available Mon-Fri, 9am-5pm Eastern time.

Email: [email protected]
Phone: 1-800-598-6067 (1-508-663-1500 x294 outside USA)
Mail: PO Box 1496, Framingham MA 01701-1496, USA



You have been logged out of PLUS+


For PLUS+ subscription assistance, contact customer service.

Need to access our premium PLUS+ Content?
Upgrade your subscription now.


Our records show that you are currently receiving a free subscription to Supply Chain Management Review magazine, or your subscription has expired. To access our premium content, you need to upgrade your subscription to our PLUS+ status.

To upgrade your subscription account, please contact customer service at:

Email: [email protected] Phone: 1-800-598-6067 (1-508-663-1500 x294 outside USA)

Become a PLUS+ subscriber and you'll get access to all Supply Chain Management Review premium content including:

  • Full Web Access. All feature articles, bonus reports and industry research through scmr.com.

  • 7 Magazine Issues per year of Supply Chain Management Review magazine.

  • Companion Digital Editions. Searchable replicas of each magazine issue. Read them in any web browser. Delivered by email faster than printed issues.

  • Digital Editions Archives. Every article, every chart and every table as it appeared in the magazine for all archive issues back to 2010.

  • Bonus email newsletters. Add convenient weekly and monthly email newsletters to your subscription to keep your finger on the pulse of the industry.

PLUS+ subscriptions start as low as $129/year*. Start yours now.
That's less than $0.36 per day for access to information that you can use year-round to better manage your entire global supply chain.

This content is available for PLUS+ subscribers.


Already a PLUS+ subscriber?


To begin or upgrade your subscription, Become a PLUS+ subscriber now.

For assistance with your PLUS+ subscription, contact customer service.

Sorry, but your login to PLUS+ has failed.


Please recheck your login information and resubmit below.



For PLUS+ subscription assistance, contact customer service.

Supply Chain Company Valuations – Where to from here

This is the first of a three-part installment on Supply Chain Valuations, written by guest contributor Michael S. Galardi, SVP Capital Alliance.

<p>With over 35 years of experience in the transportation and logistics industry, Mike Galardi brings a wealth of experience to sellers. During his career, Mike has had senior roles as a strategy consultant, operating officer, and owner of a transportation company.</p>

With over 35 years of experience in the transportation and logistics industry, Mike Galardi brings a wealth of experience to sellers. During his career, Mike has had senior roles as a strategy consultant, operating officer, and owner of a transportation company.

By ·
<p>With over 35 years of experience in the transportation and logistics industry, Mike Galardi brings a wealth of experience to sellers. During his career, Mike has had senior roles as a strategy consultant, operating officer, and owner of a transportation company.</p>

With over 35 years of experience in the transportation and logistics industry, Mike Galardi brings a wealth of experience to sellers. During his career, Mike has had senior roles as a strategy consultant, operating officer, and owner of a transportation company.

Latest News

Third Party Risk: Too Close for Comfort
The State of the DC Voice Market
AGVs: Predictably Flexible
Cold Chain Embraces Automated Storage
Rail Customer Coalition calls on White House to fill open STB positions
More News

Latest Resource

Third Party Risk: Too Close for Comfort
You’ve got a handle on many of the potential supply chain "disrupters" that can paralyze your business. But the real risk is embedded in areas you may have overlooked.
All Resources
By ·

Like all logistics companies, Supply Chain Companies (SCCs) (e.g. those specializing in software, solutions or services), saw their valuations suffer significantly during the recession of 2008 and 2009.  Since the bottom, the market has rebounded substantially, deal flow is up, and multiples are near 5 year highs.  Why has the market rewarded the companies and what’s the outlook going forward?  This is part 1 of 3 looking at the market’s valuation of SCCs.  In this part, we look at the data, how all Transportation and Logistics Companies have been valued and provide some detail on Supply Chain Company valuations.  In Part 2, we examine SCC valuations in more depth, and in Part 3, we examine what will be driving the market in the future and where we think valuations and multiples are most likely to go in the next year or two.

First, the Data
Capital Alliance analyzed publicly traded logistics companies by segment and individual private and public transactions.  Individual transactions included all known deals announced or completed in the period.  The groupings by segment, provided by Cap IQ, included companies related to the segment (e.g. trucking included truck leasing, public buses).  The SCCs tended to be companies providing software or support services used in the management of their supply chain or to coordinate with customers and vendors.

Trends in Logistics Company Valuations
Using the TEV (Total Enterprise Value, i.e. total debt plus equity) to Revenue ratio over the past 5 years provided an important view and perspective on how logistics companies have been valued.  Two other valuation ratios were also examined (P/E and TEV/EBITDA ratios) and are discussed in the second part of this series.

image

As shown in the chart:

  1. Valuations have fluctuated significantly over time with three segments all showing an upward trend in valuation multiples

  2. Values generally began declining before the recession (i.e. in late 2007 or early 2008) and bottomed between the 4th quarter of 2008 and the 1st quarter of 2009

  3. Valuations recovered quickly, preceding the economy’s recovery, and are now at or even above their 5 years highs

    • The TEV/Revenue ratios differ dramatically by segment, from about .9 to 4.1 times due to differences in their capital structure, their earnings and cash flow characteristics, and their overall competitive position

    • Railroads have high fixed capital costs and high and relatively stable EBITDA margins; they also have shown significant revenue gains, real price increases and increased market shares leading to higher valuations

    • In contrast, trucking concerns have smaller and much more volatile EBITDA margins and multiples and have experienced pricing pressure and modal shifts leading to absolute revenue declines resulting in for much lower valuation multiples

    • Supply chain firms, particularly those with software as a base product, have been better able to balance costs and pricing to manage profitability (very stable EBITDA margins) and growing demand for their services and limited capital needs leading to higher multiples than trucking but still lower than the capital intensive railroads

The Quick Rise in Valuations
Since the market’s bottom, valuations throughout the industry have risen rapidly. SCCs came back the fastest rising 128% from their 4th quarter of 2008 low.  Other segments of the industry improved at very different and generally much low rates:

  • Maritime, since its low point in the 2nd quarter of 2006, improved as much as Supply Chain entities, but it took them longer as they hit their lows a year and a half earlier

  • Airlines improved the least, rising only 29% from their lows of the 4th quarter 2008 and 2nd quarter 2009

  • Trucking valuations rose 67% from their 1st quarter 2009 low

  • Railroad valuations rose 94% from their 1st quarter 2009 low

The SCCs experienced the fastest recovery largely because their cash flows were very stable and predictable, volumes grew rapidly with the expected and realized improvement in the economy, and there was no need for significant capital investment.

Where are valuations now?
Today we see significant differences by segment.  Specifically, Railroads and Maritime have broken out of their historic valuation ranges, while Airline and Trucking companies are still within their historic trading ranges. Market dynamics will determine where these valuations go.  The key issue in this article is “Where will supply chain valuations go?”  The recent increase in valuations put SCC valuations at the top of their five year range, but not yet breaking out.  Can they break out? Will they?  These are subjects covered in the next two installments of this series.


About the Author

Michael S. Galardi
With over 35 years of experience in the transportation and logistics industry, Mike Galardi brings a wealth of experience to sellers. During his career, Mike has had senior roles as a strategy consultant, operating officer, and owner of a transportation company. Before joining Capital Alliance, Mike served as the Chairman and CFO of a regional expedited trucking company which he sold profitably in 2009. Prior to that, he was a Managing Partner in the Transportation and Logistics Strategy practice at Accenture, the lead Partner of the trucking practice at Oliver Wyman, and VP Sales and Marketing at Southern Pacific Railroad. Mike began his career on Wall Street at Kidder Peabody & Co., and then as a security analyst at Banker’s Trust. Mike has significant domestic and international experience having worked on five continents. Mike holds a BS in Industrial Engineering, cum laude, from Lehigh University, and an MBA in Banking and Finance from Columbia University. He has also completed post graduate courses in accounting at the Stern School of Management at New York University. Mike has written or co-written three books on freight profitability, profitability analysis in transportation, and the outlook for the transportation industry, as well as appearing as a featured speaker at numerous industry gatherings, both in the U.S. and abroad.

Subscribe to Supply Chain Management Review Magazine!

Subscribe today. Don't Miss Out!
Get in-depth coverage from industry experts with proven techniques for cutting supply chain costs and case studies in supply chain best practices.
Start Your Subscription Today!

Latest Whitepaper
Third Party Risk: Too Close for Comfort
You’ve got a handle on many of the potential supply chain "disrupters" that can paralyze your business. But the real risk is embedded in areas you may have overlooked.
Download Today!
From the December 2017
This is a comprehensive guide to services, products and educational opportunities targeted specifically to supply chain professionals. As with years past, we’re also featuring several articles we trust will offer food for thought in your supply chain throughout the coming year.
Transportation Trends: The last mile, history repeating
Economic Outlook: A Complex and Uneven Scenario for Global Supply Chains
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!


Latest Webcast
The Perfect Formula for Determining the Right Amount of Inventory
This webcast explains how the science of theoretical minimums, a new approach to inventory optimization, provides a simple and elegant way to reduce cost and increase customer service levels by monetizing time delays across the extended supply chain.
Register Today!
EDITORS' PICKS
Atradius Issues New Report on Supply Chain Risk in North America
The U.S. shows strong economic performance, but the looming risk that leadership in Washington will...
2018: The year we make meaningful progress on digital transformation
Perhaps it would have been better to describe it as a digital evolution – more of an ongoing...

Industrial and Supply Chain Real Estate Expected to Soar in 2018
Strong economy and insatiable demand for online shopping behind industrial real estate resurgence
Ongoing Supply Chain “Disruptions” Indicated in Latest Ti Survey
According to Logistics Surveys 2017, the express industry has already undergone transformation, not...