November 11, 2025 • 38 mins
The transportation and logistics M&A market may be quiet, but there are still pockets of strength. In this episode of Talking Transports, Tenney Group CEO Spencer Tenney joins Bloomberg Intelligence’s senior analyst Lee Klaskow to discuss what kinds of deals are getting done and how technology is becoming a key differentiator for freight brokers. They also touch on valuations, seller motivations and why next year could bring market stabilization, smarter deals and fresh opportunities for owners ready to adapt — or exit — before the next freight cycle turns.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:07):
Hi everyone, this is Lee Claskal when We're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Clascow, Senior Freight Transportation Logistics Analyst at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
and strategists around the globe. A quick public service announcement
before we dive in. Your support is instrumental to keep
(00:28):
bringing great guests and conversations to you, our listeners, and
we need your support. So please, if you enjoy this podcast,
share it, like it and leave a comment. Also, if
you've got ideas, feedback, or just want to talk transports,
I'm always happy to connect. You can find me on
the Bloomberg terminal, on LinkedIn, or on x at Logistics. Lee,
I'm very excited to have with us today. Spencer Teddy.
(00:50):
He is the president and CEO of Tenny Group, a
firm that has specialized in transportation, logistics and supply chain
M and A advisory since nineteen seventy three. He also
hosts the industry Leading M and A podcast in the
hot Seat, where he interviews top executives, investors, and innovators
shaping the future of supply chain. Welcome to Talking Transport, Spencer, Lee.
Speaker 2 (01:13):
Good to be with you.
Speaker 1 (01:14):
So I guess we're podcast competitors.
Speaker 2 (01:17):
I went, we're all chasing you, Lee. So I don't
know about that, sir.
Speaker 1 (01:23):
Okay, well flattery, we'll get you everywhere. So the Tenny group,
you know, within trucking, it is the household name. Outside
of trucking, people might not be too familiar with it.
So why don't you talk a little bit about your company? Right?
Speaker 2 (01:39):
So I won't regurgitate the bio there, but it's just
a great passion of ours. My family goes back in
the transportation space three generations. My grandfather was actually yeah,
he drove a beer truck in a taxi out of Dallas, Texas.
And so I think my dad tried to do everything
he could to stay out of this industry, as did I.
(02:01):
But you know how that goes. And so we actually,
my dad was very successful owning multiple transportation companies out
of the Dallas area, and then, like a lot of things,
it just kind of some happy accidents found ourselves advising
and helping other companies that wanted to create value and
ultimately exit. And so since nineteen seventy three. That's that's
been our specialty, so kind of starting off theory in
(02:23):
humble ways, but you know, over the course of the
last fifty plus years, we find ourselves helping business owners
go toe to toe with you know, the biggest brands
and the most acquisitive companies in our industry, whether it's
Trimac or Ashley Furniture or Forward Are we need logistics.
I mean, we've transacted with all of them. I think
part of what we're trying to do is to help
folks that have kind of spent twenty thirty years building
(02:46):
something special, just making sure that they have leverage and
uncommon influence over what that transition of ownership is going
to look like. And then you know that probably makes
up eighty percent of our practice and the other twenty
percent is helping folks solve problems on the buy side.
And you know, whether most recently helping out Brookfield Asset
Management kind of fill some holes and what they're trying
(03:06):
to do to kind of fill out some of their
infrastructure capabilities across the supply chain or what have you.
But it's just a great delight for us to be
a part of literally what makes America and what makes
the world go in serving business owners that make it happen.
So that's what we do and trying to get a
little bit better out of each day.
Speaker 1 (03:25):
So are most of your transactions that you work on,
are they trucking or there's pretty much across supply chains.
Speaker 2 (03:31):
It's everything across the supply chain between you know, truckload,
freight brokerage, freight tech and transloading, intermodal, warehousing, anything that
touches the supply chain, we're involved in it.
Speaker 1 (03:44):
So how is the m and a market right now?
Are there some sub segments that are higher than others?
Speaker 2 (03:51):
They're very much so, I mean as a whole, I
mean it's a mixed bag. I mean as a whole,
it's pretty muted right now. But with the exception of
some pockets that generally have some specialization or insulation from
some of the challenges in the marketplace, there's a lot
of iminate activity that is being pushed forward into twenty
(04:12):
six and twenty seven. But you know, we're actually having
a pretty good year. But in large parts where it's
in the pockets, it's in areas that have some kind
of you know, they're just not affected by what's going
on in the rest of the of the the frame market.
But you know, we see drive in, you see you know,
reef for some of these other things. It's just even
freight brokers, I mean extreme decline and overall in the
(04:34):
activity in those sectors.
Speaker 1 (04:36):
So without naming names if you can, so what is
a sub segment that's not affected by the craziness that
that has been the freight markets over the last three years.
Speaker 2 (04:46):
Well, anything dry bulk or liquid bulk right now has
been you know, kind of phenomenal. And you see some
of the most inquisitive plays right there. And I'll kind
of like frame it this way. In the last call
it sixty seventy days, we've done two transactions. One was
helping a refrigerated company out of bankruptcy through a three
(05:06):
sixty three sale. So that's kind of like one end
of the spectrum of characterizes what's happening in the M
and A market. And then we had, you know, a
very uncharacteristic platform investment from an agnostic private equity group
coming into truckload, which is very rare, but this is
two road partners out of New York City making a
platform investment in an amazing liquid bulk carrier petro hauler
(05:29):
Texas Trans Eastern and to me, it's like one of
the more interesting stories of the last ninety and eighty
days in our space because of how rare private equity
invests in asset heavy type platform investments. I mean, private
equity will be all over asset light, but pure asset
heavy it's less common. And so for us, that was
(05:49):
an extremely interesting story, great win for our client, but
also perhaps a trend. What I think we're going to
see some more of it, especially as technolog continues to
influence the rationale about why deals are getting done. You
don't need trucks, You're gonna need assets to fully capitalize
on that technology, and I think that's where you're going
to see more private equity involved in deals.
Speaker 1 (06:11):
So, so you used some jargon earlier that some people
might not be familiar with. Me included so you said,
a three sixty three sale, what is that?
Speaker 2 (06:21):
It's it's it's something that a lot of folks don't
realize that they're I mean, it's it's a it's a four.
It's it's managed by the bankruptcy court. They oversee it.
But it allows a seller to kind of manage that
bankruptcy process in a way that gives them more influence
over the financial outcome and over the selection over the
selection of who's going to buy those assets. Okay, and
so in that situation, we're able to help our client
(06:43):
land you know, in the firm is financial fitting. They
possibly could given the circumstances, and they also had some
influence over who's going to take over their company which
come out of bankruptcy. That's I mean, you know, beggars
can be choosers, but that's a pretty that's a pretty
good situation to kind of be in versus the alternate
of having no options.
Speaker 1 (07:01):
And you mentioned private equity, how like you know, they
kind of prefer the non asset and so that that
asset deal was with something of interest to you. I'm
assuming valuations are kind of low in truckload. Do you
think that could spur more private equity into the space.
Speaker 2 (07:17):
I don't know, probably not. I think that I don't
see low valuation historically being a big enough carrot to
get into space. And the reason why they don't like
it they don't like the cap X. It doesn't fit
with their thesis and how they want to scale companies
and deliver returns to their funds. I think what's been
(07:38):
true in the past what will continue to be true
in the future, is that private equity is always interested
in exceptional companies, and that was the case in this
Texas transition deal. They were far superior to anybody in
that region from a pure performance standpoint. So at the
end of the day, you know, winning dictates investment, and
I think that specifically for like you know, private equity
(07:58):
platform type investment. So short answer, no, I don't think
it's going to affect the way they do it. I
think that private aqu we's going to be attuned to
some of the opportunities in this space, but they're always
going to try to focus their investment energy around the
best possible companies in the most sizable companies at the
same time.
Speaker 1 (08:18):
Right, and you know you mentioned earlier that some of
the tech investments or deals might get pushed out into
twenty twenty six, twenty seven. What's what's driving that delay
because obviously, you know, when when the companies that I
cover are talking about AI, you know, there's a lot
of hype around it, but it actually seems to be
doing good things. Like when you look at H. Robinson
(08:39):
and the productivity that they've been able to get. So
why are those kind of investments getting or those kind
of deals getting pushed out into the latter years.
Speaker 2 (08:51):
Well, well, there's two things, and maybe I didn't communicate
that very clearly. I think what the technology is fascinating,
and I think it's fascinating enough that it will attract
private equity investment to come invest in not just asset
light but asset heavy business models because most of the data.
(09:11):
In order to I mean that the money's in the data,
and in order to control the data, you have to
invest in the assets, be the tractors or the trailers.
So I think that I think that that's what will
be interesting moving forward, and how private equity thinks about
transportational logistics and how they can create value. So so
(09:32):
I think you're gonna need assets or you're gonna need scale.
To your point, there's there's plenty of asset lights that
are companies that are currently capturing and capitalizing on you know,
AI automation of a variety of different things. I think
that's very true on the freight brokerage side, I think
(09:52):
the challenge is for the actual freight tech companies like,
how are they going to create value based on the
fact that their products are potentially becoming obsolete every you know,
twelve to eighteen months, and so I think that that
that's the issue. From from my standpoint, I think that's
what where the real market risks. The greatest beneficiaries are
not the tech companies themselves. I think it's the the
(10:13):
people that are using the technology and you know, can
you know, shift from from one product to the next
as necessary without resolving themselves to any one platform, gotcha?
Speaker 1 (10:26):
You know, I don't know how much you look at
the LTL space, but there's been some consolidating there with
with larger players like night Swift. From your vantage point
on the smaller regionals, are you seeing I guess more
players thinking oh, we have to get bigger to better
compete against these larger national networks.
Speaker 2 (10:47):
I don't know if that's how they think. I think
so many folks, I mean, I mean, you think about this, Leo.
The last five years, we've not had two consecutive normal
FRAY markets. I mean, it's been literally like whip whiplash
the last five years in a row. And there's so
many folks that we're counting on twenty twenty five to
(11:07):
be the year that would be a major market, and
so many folks just to keep the lights on. They
have you know, emptied their operational reserves, and for a
lot of these folks, they don't they don't have a
lot of options, and so I don't think any of
them are thinking about, like we need to go compete
or we're going to go acquire, although that I think
(11:28):
that's a if that was the conclusion, I think that
would make sense to try to figure out how to
acquire some competitors or merge. I think the majority energy
is to figure out how to you know, how to
survive presently until until they get some help from a
from a freight market. I mean, there are some things
is coming at ATA. I think there are some signs
(11:51):
that help is on the way. But not to not
to be a downer here, but I mean, I don't
think that we're going to see near fast enough correction
for a lot of these folks to meaningfully feel that
on a P and L.
Speaker 1 (12:04):
Right, So when you're talking, I guess on the truckload side,
what motivates a small to mid sized company wanting to
sell itself? Is it just the fact that they can't survive.
Is it like it's a family business. Can you talk
a little bit about the motivation to sell several things.
Speaker 2 (12:21):
I mean, some of it is just it could be
a multi generational company and there's just no successor nobody
in the next generation has the interest or the ability
to take the company to the next level. And so
I think some of it's just the writings on the
wall and they realize that ninety percent of their personal
networks tied up in a in an asset that's not liquid.
(12:42):
So that's a problem for a lot of people that
need financial security at this season of their life. So
that's part of it. I think some of it. I've
heard some interesting comments of the last six months where
a lot of folks look at this and say, hey,
I think this is going to be the most exciting
period in the history of you know, the freight industry
over the next five years, and I want to be
a part of it. I just don't want to get
(13:04):
my teeth kicked in the whole time while I'm doing it,
or you know, bear the weight of all of the
stress of being a small and mid sized operator. When
you know, they see the writing on the wall, the
saying this is not going to be an industry that
is going to cater too small and mid sized companies.
It's going to be brutal on them. And so I
think that what I'm hearing is a lot of folks
(13:24):
want they love this industry, they want to be a
part of it, but this is going to be their
stepping off point to create that liquidity, stay involved in
it in some way, work with the you know, with
the buyer, play a meaningful role in something that they
really care about. But it's just extremely difficult for a
company without scale to address the uh, you know, you know,
(13:47):
relentless increasing and increases in operational costs.
Speaker 1 (13:51):
Right. Yeah, We've seen huge increases and insurance costs, equipment costs,
people costs. It's been been a very tough business for
a lot of carr especially given the depressed rate environment.
So are there certain I guess technologies out there that
you know that come across your desk that you're you're
(14:11):
kind of excited about in terms of what it can
do for uh, supply chains and transportation in general.
Speaker 2 (14:18):
That there's a there's a handful, I mean to me,
I mean, quite honestly, it's a little overwhelming, and I
can understand why. The folks that have the opportunity. I mean,
there's there's literally some product for every problem within a
truckload carrier or a freight brokerage right now. I mean
anything that you could imagine, there's there's a potential way
to use an AI agent to reduce ah, you know,
(14:42):
full time equivalent or more. And we're seeing it across
the board. Which what's interesting is that as we continue
to see these things, which are pretty phenomenal, you get
one of these freight agents that's AI sounds just like
a human. They're negotiating better than humans to get rates
where they need to be.
Speaker 1 (14:58):
We're actually two AI agents people. We just don't know
that yet.
Speaker 2 (15:01):
So yeah, yeah, So I think that I've shadowed some
of these calls. They're phenomenal of what the technology can
actually do. What's so discouraging is that some of these
folks have there, they have deployed this technology and it's
fully implemented. They've reduced headcount by forty percent, yet they're
still kind of break even from a profitability standpoint, which
(15:23):
is which is crazy. And so I think what's kind
of proliferated. A lot of this AI us is I
don't think that the actual folks that have the technology
that are selling it, I don't think they're selling it
at a profitle rate. At some point they're going to
raise the rates they have to because they can't sustain themselves.
(15:44):
And so what it will be interesting is that which
kind of wean folks off these kind of free or
entry level products, like when they actually have to pay
for them, Like, what's going to be the impact at
that point? And that's kind of what I have my
eye on. Ultimately, the folks that I see doing the
best have either partnered with some type of AI specialists
(16:04):
that can create capabilities on the fly, versus buying product
after product which you're just kind of married to that
product at that point. I think that in the interim
period where everyone's still trying to figure this out, I
think the magic is going to be, you know, trying
to partner with groups that can give you more and
(16:26):
more agile approach to the available technologies. And and did
you change when something else becomes more effective?
Speaker 1 (16:34):
Do you think freight brokers that don't lean into tech,
whether it's AI or just you know, because AI has
a lot of meetings. But you know, assuming it's it's
it's not if they're not leaning into tech, are they
going to be able to compete in five years? You
know that the freight broker with the rolodex, a phone
and a pack of cigarettes, you know, like that kind
of an old school broker, Like can they can they
(16:57):
compete against now?
Speaker 2 (16:58):
I don't think they canpet the next eighteen monthsly, quite frankly,
I mean I think that kind of a dead man
walkin right now. They're probably still you know, you know,
dipping into PPP money that was you know, dolled out
four years ago and still have a little bit left
to kind of you know, bridge cash flow gaps. But no,
I don't think that's gonna happen at all. I think
it's going to get even more advanced. So there's a
(17:23):
lot of folks right now. I saw Craig Fuller talk about,
you know, a multiple different freight brokerages probably gonna you know,
self elect out or go bankrupt or do whatever in
the next six to twelve months. I do think that
there's some truth in that, but you know, and that
the vast majority of folks who will be in that
(17:44):
group are folks that have not integrated or adapted to
the realities of where we're at in the industry right now.
Speaker 1 (17:51):
So are those the kind of folks that are you know,
maybe you're sending you an email and saying, hey, we're
we're looking to sell because you know, if if you
can take maybe their book of business and bring it
into a company that has leaned into the tech, you
know that that could really create.
Speaker 2 (18:06):
Some value potentially. I think that that that's part of
the case I think right now, so much of this
is driven about what makes the revenue sticky, what makes
the customer sticky, and the technology is not a major
factor what's driving M and A presently, because I think
everyone else is still trying to figure this out. What
(18:26):
people want. They want new revenue and they want it
to be sticky. So where we see deals getting done
in the freight brokerage, it usually has something that is
very complex, very clunky, and and something that a lot
of people don't want to do because of the complexity
of the move. It's those types of deals you know
(18:48):
that you can if you have those types of relationships.
Those are those are characteristicalistics that if they're involved in
a company, a deal can get done because you know,
somebody can't just show up and take that business away.
There's a relationship there, there's some depth and so you know,
those are the main characteristics that we're seeing right now.
(19:08):
Or if there's barrier to entry or what have you.
But you know, good customer relationships or it could be
access to a new customer that perhaps the buyer could
expand that relationship. Those are those are the main things
versus you know tech.
Speaker 1 (19:21):
But can you give us an example of something that
that's sticky, like a type of a move that that
that that is hard or difficult.
Speaker 2 (19:28):
Yeah, well, we did a deal with Third Coast Logistics.
This is a freight broke which out of Austin, and
you know they had some they were doing these types
of moves where they would go to elementary schools and
they would unload you know that we get there, they'd
have to hand unload various materials, take it into the school.
(19:50):
Very cumbersome, labor intensive, and you know, for a lot
of folks, there's you know, there's safety.
Speaker 1 (19:57):
Elements to that.
Speaker 2 (19:58):
There's there's there's kind of like some protocol all they
have to do. So there's just multiple reasons why if
someone's just trying to turn and burn freight like that, like, well,
I don't want to do that. That's too much. I
don't want to do that. But in doing so, the
people that are actually willing to do it, they can
have more influence over the pricing of that work, have
more profitability, and over time, once that relationship's in place,
(20:19):
the customer is not going to shop that and try
to beat them up on price. So, you know, like
like anything else, like the you know, the the cost
to retain the customers about eleven percent of what it
is to create a new customer. And so I think
that's the main thing that when people are trying to
value these these customers and when they look at these
stickiness or the complexity of these moves. You know, the
(20:39):
more complex, the more clunky in any cases, the better.
Speaker 1 (20:44):
Yeah. So you know, we we we get. You know,
we hear a lot about like health care logistics, how
that is an area suspect the specialty that's needed to
do that? Is that an area where you're seeing more
m and a activity.
Speaker 2 (20:58):
One hundred percent? I mean that that's a big a
focus area. And you think about it too, just from
a growth standpoint, you look at the demographics of the
United States and how many aging baby boomers that we have.
When they start looking at the need to move more freight,
that matches that criteria, that has some barriers to entry
(21:21):
in terms of who's qualified to move it and who isn't,
makes it very, very attractive from an investment standpoint to
try to get that. There's not a ton I mean
from an inventory standpoint, they don't. There's a there's not
a ton of folks who who who do that at
a highlight, who do it at scale and do it
very well. And so when those are opportunities come up,
(21:41):
they usually attract a lot of attention from an m
and a standpoint.
Speaker 1 (21:44):
So when you're when you're talking to your clients and perspective,
clients and and and I know all our crystal balls
are pretty buggy right now. You know what, what are
they telling you about twenty twenty six? You know, as
or either when it comes to rates or supply, you know,
(22:04):
do they seem more optimistic or you know, what is
the mood going into twenty twenty six, Because we're almost
there to be in a blink of an eye, we're
gonna we're going to be celebrating New Years.
Speaker 2 (22:17):
You know, I mentioned, you know, these five very unique
freight periods between twenty one and twenty twenty five, And
right now, I think I'm seeing that, you know, probably
the most the kinder and gentler version of business owners
that I've seen in a while. And I think folks,
you're recognizing that they may get some help. Even if
(22:43):
they do, it may not be a lot. So I
think the expectations are I'd really like to be able
to select who buys this company, have some influence over that,
and I just need conditions to get better than where
they are right now, just to make sure that we
don't leave money on table. So I I those are
some of the main things on the freight brokeer side.
(23:04):
I mean, they need a major uptick for some of
that to make sense. I mean a lot of these
folks trailing to even large companies trailing twelve months ebidas,
you know, break even in some case negative for some
of these folks, and you know that doesn't and that
doesn't represent the quality of their company. That's just the
realities of the on a macro level. So for some
of these folks, some of them don't want to sell.
(23:27):
It's just it's very empowering when they know that if
they want, if they wanted to, they could. So that's
kind of what I'm hearing is like, over the next
twelve months, macro conditions should improve in a way that
where I'm going to have much better strategic options than
I had in twenty twenty five. So it's more of
a sense of relief that if I decide to exit,
(23:48):
I'm probably going to be able to in a way
that's satisfactory. But even if I don't, it's going to
be wonderful to get back to a place where, you know,
just that they feel like that they have more control
over what they've been you know, what they've built in
their companies and how they've invested in it.
Speaker 1 (24:05):
And can you just talk broadly about valuations. I don't
know if it makes more sense to talk about it
per sub segment, but like kind of like where where
are we versus where we've been? You know, you don't
have to give like you know, were we twenty percent
off the peak or fifty percent off the peak? And
when was the peak? And you know, so something like that.
Speaker 2 (24:24):
Yeah, I mean I think that for context here is
that most people are like when when they talk about
the peak, well, what made the peak? I mean, we
had COVID, which we had, you know, we kind of
pushed forward three years worth of demand on goods. I
think I heard Derrek Leathers talking about this on your podcast.
Uh he had a great explanation of it. I'll just
(24:45):
I'll just direct you to go have him explain it.
I think he did a really good job of kind
of explaining you know, how we push pushed all of
this freight movement forward and then it kind of just
dried up. But at the same time, we also effectively
had free debt. So all of that in terms of
kind of created this wild wild West situation that to
(25:06):
me offers no relevance whatsoever as a reference point for
anything like to make sense of. But I think what's
encouraging moving forward is that, you know, we were getting
signals from the fad that we're going to have We
just had interest rate reduction, possibly another four things are
going to stabilize. I think that's going to help. But
the reality is right now, you know, anything that is
(25:28):
you know, commoditized freight, it's very difficult to trade at all.
You know, unless you're like four or five hundred trucks.
The deal that I mentioned with the Texas transition, that
was a very healthy multiple on that deal. Other deals
that are specialized, I think they're getting healthy multiples. Freight broke,
which is probably the one that across the board where
(25:49):
I would say is probably struggling the most because I
think there is the market was traumatized a little bit
because they went the guy a little bit too crazy
between twenty two twenty three. So I do I do
think that there has been a specific muting on valuations
for that specific category, and I think that that's probably
(26:11):
good and and I and I also think it's it
reflects the the uncertainty about the relevance of that business
model frankly over the next five years, like how is
it going to evolve and can you bank on it
from a from a value standpoint in the way that
you have in the past, particularly if you don't have scale.
Speaker 1 (26:33):
And so.
Speaker 2 (26:36):
With the emergence of so much technology in that space,
I think rightfully so, folks are a little bit concerned
about how how much to spend and how much to invest,
how high to value those companies.
Speaker 1 (26:47):
So when you're working on a merger or you know,
an acquisition, and it's not like you know, a financial buyer,
it's it's a it's a strategic buyer or something. What
what do you find that a deal has to have
for it to work, because obviously, you know you do
a post more of them a year later, it could
(27:07):
have been a good deal and it could have been
a bad deal. So like, what what makes a good deal?
Speaker 2 (27:12):
The one characteristic where I think has the highest core
or the greatest correlation to post transaction success, if that's
what you're asking, Yeah, is the strength of the target
company's management team. And what I mean by that?
Speaker 1 (27:28):
And we did a deal with.
Speaker 2 (27:32):
Blue Jay Capital and triedent private equity group for large
courier company out of Minneapolis, And in my podcast is
interviewed in Pierre Matthew and he talks about this is
like when you know, when private equity is viewing an investment,
the number one thing is the strength of the management team.
But also what is the capability. It's not not their
(27:55):
strength in today, it's what is their capacity to grow
the business two three to four x. And I think
that's where a lot of folks when they're acquiring, particularly
if it's a platform investment. They overestimate that management team's
ability to scale the company moving forward, and so you know,
(28:16):
you know what ends up happening is they end up
having to plug and play year two. They have to
get new leadership, and that is very disruptive and it
puts the overall return at risk on the on the investment.
So that I would say, without question, the highest correlation,
the factor that correlates to the greatest success is that
you just have an all star management team that has
(28:37):
presently the ability to go three to four x that
that company without having a lot of additional cap They
just have the ability, they have the knowledge. They't that
maybe they've done it before in a different organization. But
that's probably the most valuable way, the most valuable thing
to creating value, and it's also the surest way to
de risk that transition of ownership gotcha.
Speaker 1 (28:58):
So there's been a lot of action obviously Washington that
have impacted supply chains, good and bad. You know, when
we're looking at capacity in the trucking market, which you
know obviously there needs to be flushed out a little bit.
There's some things going on, whether it's the English language
proficiency enforcement non domicile cd ls or or you know,
(29:18):
cracking down on cabotage. What what what do you think
that's do you think that's gonna really make a mark
on trucking because some some folks have been pretty, uh
extremely bullish on on you know, what could happen uh
to rates because of that, and some people have been
a little more cautious. I guess where do you where
do you Where do you come in on that?
Speaker 2 (29:40):
I think where I come in is that, you know,
I think these things kind of become a political issue,
which I'm just like, Hey, usually when our government, our
government enforces the laws that are designed to protect people
and companies, we're generally more healthy and we perform better.
So to me, it's just like I don't I don't
have like a like this is going to be this
silver bullet. But but yes, absolutely this this will help
(30:05):
in the short and long term.
Speaker 1 (30:07):
But there's.
Speaker 2 (30:09):
You know, to me, when you've got demand down or
volumes down eighteen percent, that the demand is the main issue.
Like we like, there's got to be more demand in
the space to actually affect you know, freight rates presently.
So so to me, like there's a disproportionate amount of
attention on this. I think it's I don't think there
(30:30):
should be any conversation that this should be happening. It's
from a safety standpoint and for all just you know,
credibility for government enforced laws. But I think I'm a
little bit more conservative on what I think it's actually
going to do.
Speaker 1 (30:46):
And so you mentioned so it's so you view it
as more on the demand side. What has to happen
for that demand to pick up? I mean, is it
just like, let's hope these interest rate cuts spur a
little more economic growth because you know, GDP expectations are
pretty mild for the next two years.
Speaker 2 (31:07):
Well, I think a lot of this is has already
put in motion. You know, the one big beautiful bill
which we talked about at length that the American Truck
Association was on a panel with Rant Thornton in a
variety of other folks talking about the impact of this.
This is going to unlock tremendous investment in the United States.
It's going to be helpful, but we still need stability
(31:29):
in the marketplace. There's still some trade deals that need
to get done. There's still some stability that has to
take place, and I think we're probably six to twelve
months away from from that really happening, from us being
able to fully benefit from the intent of the one
bit you know, all the factors in the one big
beautiful bill. So I do believe all those things in
(31:50):
combination will be significant. It's it's just going to take
a little bit more.
Speaker 1 (31:55):
Time, gotcha. So I remember I read in your bio
that you're you come from music before you got into
investment banking. That did I read that?
Speaker 2 (32:06):
Oh? Yeah, well that was one of the things I
was trying to do to avoid getting into the transportation industry.
But yeah, I was a music guy and another life
of the songwriter had a music publishing company.
Speaker 1 (32:16):
Okay, And and you're you're based in outside of Nashville,
So like are you was it country music?
Speaker 2 (32:23):
Country?
Speaker 1 (32:23):
Yeah?
Speaker 2 (32:24):
Country music? You know, I I uh, I came out
here and you know, I met some of the most
amazing people, some of the most talented people in the world,
quite frankly, and uh, pretty remarkable experience, and you know,
blessed to call a lot of those folks friends to
this day. My greatest victory in music, though, was meeting
(32:45):
my wife, who was a songwriter as well. And so
once I got once I got that locked down, Lee,
I was like, hey, all those years learning how to
play guitar finally paid off and so uh so that so.
Speaker 1 (32:56):
It all worked out pretty well good. I'm glad. And
so have you written any any songs about trucking or
transports that have been published or recorded?
Speaker 2 (33:05):
No, I don't, I don't think so. I wrote a
song a long time ago. I.
Speaker 1 (33:11):
Uh, we have this.
Speaker 2 (33:13):
We have this truck in our family. I bought it
when I was fifteen years old. Okay, we have passed
it or I sold it to my brother, he sold
it back to me. I sold it to my dad.
It's a seventy nine for pickup truck. And so a
long time ago we wrote a song about that truck
called Old Brown and so that that was kind of fun,
but that that's probably my one trucking song.
Speaker 1 (33:34):
All right, great, I'm assuming you still strum the guitar,
you know, and you're not doing deals.
Speaker 2 (33:40):
Well yeah, you know. I still get the isg from
time to timely for sure.
Speaker 1 (33:44):
Okay, and so you know, I do like to ask
people how they got into freight transportation. But you mentioned
at the top of the show that you know, you're
it's really in your blood. When did you realize that
this is something that you wanted to do? You know,
it kind of like drew you back into I guess
the family business, if you will.
Speaker 2 (34:07):
When I got back in and I was just like,
you know, coming out of the gypsy life and I
just needed to just needed to make some money. Yeah,
but I remember watching my dad support a handful of
business owners and guided them through, you know, the largest
financial event of their lifetime, and then having a front
(34:28):
row seat to watch those guys use that liquidity event,
bless their communities, bless their neighbors, do all kinds of
remarkable things. And because I don't know, I just think
our industry attracts super generous people that are other centered,
and I'm sure you've met a ton of them. But
(34:51):
and so for me, like when you get a little
taste of that, you're like, man, this is pretty special
thing to be a part of. And then I just
kind of fell in love with it and just the
idea that you know, may I've got a unique calling
to help these these folks create value and advance of
a sale and then you know, help them navigate something
that you know, they may know trucking and may be
(35:12):
the very best the best, but they've probably never done this,
and so it's it really is a great privilege to
help them navigate that and then, like I said, have
that front row seat to see what they do in
it in the next chapter of lives.
Speaker 1 (35:24):
Gotcha, yep. And then I also like to ask this
question of most of my guests towards the end, is
there like a do you have like a favorite book
on transportation or leadership or finance for that matter. You know,
I think a lot of people that listen to the
podcast or are generalists and they would like to learn more,
whether it's about the trucking industry or transportation or even
(35:47):
you know, you know, h M and a activity.
Speaker 2 (35:51):
Well a couple I would say. I read a great
book book a while back called Door to Door and
this is probably it's a little dated. It's it might
be ten year years old now. It was just a
fascinating way to think about kind of the future of transportation,
why we do things the way that we do. That
was one that was pretty interesting. I'm always looking at
(36:12):
leadership books. A couple of things I've been working on
right now one is the power of full engagement. I'm
getting a lot of value from that. About to wrap
that book up, it's just talking about managing energy over time,
and I think that you know, when leaders within transportation logistics,
they don't have any more time available, so figuring out
how to manage energy is a more effective way to
(36:32):
think about production. And then lastly, my wife turned me
on this book a long time ago called Boundaries. It's
psychologist doctor Henry Cloud, and it really just talks about
having really healthy relationships. And if you think about it
from a leadership standpoint, if you can figure out how
to have extremely healthy relationships that are boundaried that you
(36:57):
can speak authentically what's true and and in a loving
way with the people that are the twelve people that
are that are closest to you, there's a pretty chance
that pretty much everything and you know beyond that, it's
going to work out pretty well. And so I would
highly recommend that to the people in a leadership position
because I think it does have some amazing concepts to
(37:18):
help you know, marriages, relationships with your boss, with your coworkers.
Very impactful for me for sure.
Speaker 1 (37:27):
All right, great, well, Spencer, I really want to thank
you for your time and insights today. I really appreciated
your time and I really enjoyed the conversation, so thank
you so much. Likewisely, and I want to thank you
for tuning in. If you liked the episode, please subscribe
and leave a review. We've lined up a number of
great guests for the podcast, so please check back to
your conversations with these executives, shippers, regulators, and decision makers
(37:50):
within the freight markets. Also, if you want to learn
more about the freight transportation markets, check out our work
on the Bloomberg Terminal, at b I Go and on
social media. This is Lee Glasgow signing up. Thanks for
talking transports with me. Speak to you soon. Bye bye,
Hi everyone, this is Lee Claskal when We're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Clascow, Senior Freight Transportation Logistics Analyst at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
and strategists around the globe. A quick public service announcement
before we dive in. Your support is instrumental to keep
(00:28):
bringing great guests and conversations to you, our listeners, and
we need your support. So please, if you enjoy this podcast,
share it, like it and leave a comment. Also, if
you've got ideas, feedback, or just want to talk transports,
I'm always happy to connect. You can find me on
the Bloomberg terminal, on LinkedIn, or on x at Logistics. Lee,
I'm very excited to have with us today. Spencer Teddy.
(00:50):
He is the president and CEO of Tenny Group, a
firm that has specialized in transportation, logistics and supply chain
M and A advisory since nineteen seventy three. He also
hosts the industry Leading M and A podcast in the
hot Seat, where he interviews top executives, investors, and innovators
shaping the future of supply chain. Welcome to Talking Transport, Spencer, Lee.
Speaker 2 (01:13):
Good to be with you.
Speaker 1 (01:14):
So I guess we're podcast competitors.
Speaker 2 (01:17):
I went, we're all chasing you, Lee. So I don't
know about that, sir.
Speaker 1 (01:23):
Okay, well flattery, we'll get you everywhere. So the Tenny group,
you know, within trucking, it is the household name. Outside
of trucking, people might not be too familiar with it.
So why don't you talk a little bit about your company? Right?
Speaker 2 (01:39):
So I won't regurgitate the bio there, but it's just
a great passion of ours. My family goes back in
the transportation space three generations. My grandfather was actually yeah,
he drove a beer truck in a taxi out of Dallas, Texas.
And so I think my dad tried to do everything
he could to stay out of this industry, as did I.
(02:01):
But you know how that goes. And so we actually,
my dad was very successful owning multiple transportation companies out
of the Dallas area, and then, like a lot of things,
it just kind of some happy accidents found ourselves advising
and helping other companies that wanted to create value and
ultimately exit. And so since nineteen seventy three. That's that's
been our specialty, so kind of starting off theory in
(02:23):
humble ways, but you know, over the course of the
last fifty plus years, we find ourselves helping business owners
go toe to toe with you know, the biggest brands
and the most acquisitive companies in our industry, whether it's
Trimac or Ashley Furniture or Forward Are we need logistics.
I mean, we've transacted with all of them. I think
part of what we're trying to do is to help
folks that have kind of spent twenty thirty years building
(02:46):
something special, just making sure that they have leverage and
uncommon influence over what that transition of ownership is going
to look like. And then you know that probably makes
up eighty percent of our practice and the other twenty
percent is helping folks solve problems on the buy side.
And you know, whether most recently helping out Brookfield Asset
Management kind of fill some holes and what they're trying
(03:06):
to do to kind of fill out some of their
infrastructure capabilities across the supply chain or what have you.
But it's just a great delight for us to be
a part of literally what makes America and what makes
the world go in serving business owners that make it happen.
So that's what we do and trying to get a
little bit better out of each day.
Speaker 1 (03:25):
So are most of your transactions that you work on,
are they trucking or there's pretty much across supply chains.
Speaker 2 (03:31):
It's everything across the supply chain between you know, truckload,
freight brokerage, freight tech and transloading, intermodal, warehousing, anything that
touches the supply chain, we're involved in it.
Speaker 1 (03:44):
So how is the m and a market right now?
Are there some sub segments that are higher than others?
Speaker 2 (03:51):
They're very much so, I mean as a whole, I
mean it's a mixed bag. I mean as a whole,
it's pretty muted right now. But with the exception of
some pockets that generally have some specialization or insulation from
some of the challenges in the marketplace, there's a lot
of iminate activity that is being pushed forward into twenty
(04:12):
six and twenty seven. But you know, we're actually having
a pretty good year. But in large parts where it's
in the pockets, it's in areas that have some kind
of you know, they're just not affected by what's going
on in the rest of the of the the frame market.
But you know, we see drive in, you see you know,
reef for some of these other things. It's just even
freight brokers, I mean extreme decline and overall in the
(04:34):
activity in those sectors.
Speaker 1 (04:36):
So without naming names if you can, so what is
a sub segment that's not affected by the craziness that
that has been the freight markets over the last three years.
Speaker 2 (04:46):
Well, anything dry bulk or liquid bulk right now has
been you know, kind of phenomenal. And you see some
of the most inquisitive plays right there. And I'll kind
of like frame it this way. In the last call
it sixty seventy days, we've done two transactions. One was
helping a refrigerated company out of bankruptcy through a three
(05:06):
sixty three sale. So that's kind of like one end
of the spectrum of characterizes what's happening in the M
and A market. And then we had, you know, a
very uncharacteristic platform investment from an agnostic private equity group
coming into truckload, which is very rare, but this is
two road partners out of New York City making a
platform investment in an amazing liquid bulk carrier petro hauler
(05:29):
Texas Trans Eastern and to me, it's like one of
the more interesting stories of the last ninety and eighty
days in our space because of how rare private equity
invests in asset heavy type platform investments. I mean, private
equity will be all over asset light, but pure asset
heavy it's less common. And so for us, that was
(05:49):
an extremely interesting story, great win for our client, but
also perhaps a trend. What I think we're going to
see some more of it, especially as technolog continues to
influence the rationale about why deals are getting done. You
don't need trucks, You're gonna need assets to fully capitalize
on that technology, and I think that's where you're going
to see more private equity involved in deals.
Speaker 1 (06:11):
So, so you used some jargon earlier that some people
might not be familiar with. Me included so you said,
a three sixty three sale, what is that?
Speaker 2 (06:21):
It's it's it's something that a lot of folks don't
realize that they're I mean, it's it's a it's a four.
It's it's managed by the bankruptcy court. They oversee it.
But it allows a seller to kind of manage that
bankruptcy process in a way that gives them more influence
over the financial outcome and over the selection over the
selection of who's going to buy those assets. Okay, and
so in that situation, we're able to help our client
(06:43):
land you know, in the firm is financial fitting. They
possibly could given the circumstances, and they also had some
influence over who's going to take over their company which
come out of bankruptcy. That's I mean, you know, beggars
can be choosers, but that's a pretty that's a pretty
good situation to kind of be in versus the alternate
of having no options.
Speaker 1 (07:01):
And you mentioned private equity, how like you know, they
kind of prefer the non asset and so that that
asset deal was with something of interest to you. I'm
assuming valuations are kind of low in truckload. Do you
think that could spur more private equity into the space.
Speaker 2 (07:17):
I don't know, probably not. I think that I don't
see low valuation historically being a big enough carrot to
get into space. And the reason why they don't like
it they don't like the cap X. It doesn't fit
with their thesis and how they want to scale companies
and deliver returns to their funds. I think what's been
(07:38):
true in the past what will continue to be true
in the future, is that private equity is always interested
in exceptional companies, and that was the case in this
Texas transition deal. They were far superior to anybody in
that region from a pure performance standpoint. So at the
end of the day, you know, winning dictates investment, and
I think that specifically for like you know, private equity
(07:58):
platform type investment. So short answer, no, I don't think
it's going to affect the way they do it. I
think that private aqu we's going to be attuned to
some of the opportunities in this space, but they're always
going to try to focus their investment energy around the
best possible companies in the most sizable companies at the
same time.
Speaker 1 (08:18):
Right, and you know you mentioned earlier that some of
the tech investments or deals might get pushed out into
twenty twenty six, twenty seven. What's what's driving that delay
because obviously, you know, when when the companies that I
cover are talking about AI, you know, there's a lot
of hype around it, but it actually seems to be
doing good things. Like when you look at H. Robinson
(08:39):
and the productivity that they've been able to get. So
why are those kind of investments getting or those kind
of deals getting pushed out into the latter years.
Speaker 2 (08:51):
Well, well, there's two things, and maybe I didn't communicate
that very clearly. I think what the technology is fascinating,
and I think it's fascinating enough that it will attract
private equity investment to come invest in not just asset
light but asset heavy business models because most of the data.
(09:11):
In order to I mean that the money's in the data,
and in order to control the data, you have to
invest in the assets, be the tractors or the trailers.
So I think that I think that that's what will
be interesting moving forward, and how private equity thinks about
transportational logistics and how they can create value. So so
(09:32):
I think you're gonna need assets or you're gonna need scale.
To your point, there's there's plenty of asset lights that
are companies that are currently capturing and capitalizing on you know,
AI automation of a variety of different things. I think
that's very true on the freight brokerage side, I think
(09:52):
the challenge is for the actual freight tech companies like,
how are they going to create value based on the
fact that their products are potentially becoming obsolete every you know,
twelve to eighteen months, and so I think that that
that's the issue. From from my standpoint, I think that's
what where the real market risks. The greatest beneficiaries are
not the tech companies themselves. I think it's the the
(10:13):
people that are using the technology and you know, can
you know, shift from from one product to the next
as necessary without resolving themselves to any one platform, gotcha?
Speaker 1 (10:26):
You know, I don't know how much you look at
the LTL space, but there's been some consolidating there with
with larger players like night Swift. From your vantage point
on the smaller regionals, are you seeing I guess more
players thinking oh, we have to get bigger to better
compete against these larger national networks.
Speaker 2 (10:47):
I don't know if that's how they think. I think
so many folks, I mean, I mean, you think about this, Leo.
The last five years, we've not had two consecutive normal
FRAY markets. I mean, it's been literally like whip whiplash
the last five years in a row. And there's so
many folks that we're counting on twenty twenty five to
(11:07):
be the year that would be a major market, and
so many folks just to keep the lights on. They
have you know, emptied their operational reserves, and for a
lot of these folks, they don't they don't have a
lot of options, and so I don't think any of
them are thinking about, like we need to go compete
or we're going to go acquire, although that I think
(11:28):
that's a if that was the conclusion, I think that
would make sense to try to figure out how to
acquire some competitors or merge. I think the majority energy
is to figure out how to you know, how to
survive presently until until they get some help from a
from a freight market. I mean, there are some things
is coming at ATA. I think there are some signs
(11:51):
that help is on the way. But not to not
to be a downer here, but I mean, I don't
think that we're going to see near fast enough correction
for a lot of these folks to meaningfully feel that
on a P and L.
Speaker 1 (12:04):
Right, So when you're talking, I guess on the truckload side,
what motivates a small to mid sized company wanting to
sell itself? Is it just the fact that they can't survive.
Is it like it's a family business. Can you talk
a little bit about the motivation to sell several things.
Speaker 2 (12:21):
I mean, some of it is just it could be
a multi generational company and there's just no successor nobody
in the next generation has the interest or the ability
to take the company to the next level. And so
I think some of it's just the writings on the
wall and they realize that ninety percent of their personal
networks tied up in a in an asset that's not liquid.
(12:42):
So that's a problem for a lot of people that
need financial security at this season of their life. So
that's part of it. I think some of it. I've
heard some interesting comments of the last six months where
a lot of folks look at this and say, hey,
I think this is going to be the most exciting
period in the history of you know, the freight industry
over the next five years, and I want to be
a part of it. I just don't want to get
(13:04):
my teeth kicked in the whole time while I'm doing it,
or you know, bear the weight of all of the
stress of being a small and mid sized operator. When
you know, they see the writing on the wall, the
saying this is not going to be an industry that
is going to cater too small and mid sized companies.
It's going to be brutal on them. And so I
think that what I'm hearing is a lot of folks
(13:24):
want they love this industry, they want to be a
part of it, but this is going to be their
stepping off point to create that liquidity, stay involved in
it in some way, work with the you know, with
the buyer, play a meaningful role in something that they
really care about. But it's just extremely difficult for a
company without scale to address the uh, you know, you know,
(13:47):
relentless increasing and increases in operational costs.
Speaker 1 (13:51):
Right. Yeah, We've seen huge increases and insurance costs, equipment costs,
people costs. It's been been a very tough business for
a lot of carr especially given the depressed rate environment.
So are there certain I guess technologies out there that
you know that come across your desk that you're you're
(14:11):
kind of excited about in terms of what it can
do for uh, supply chains and transportation in general.
Speaker 2 (14:18):
That there's a there's a handful, I mean to me,
I mean, quite honestly, it's a little overwhelming, and I
can understand why. The folks that have the opportunity. I mean,
there's there's literally some product for every problem within a
truckload carrier or a freight brokerage right now. I mean
anything that you could imagine, there's there's a potential way
to use an AI agent to reduce ah, you know,
(14:42):
full time equivalent or more. And we're seeing it across
the board. Which what's interesting is that as we continue
to see these things, which are pretty phenomenal, you get
one of these freight agents that's AI sounds just like
a human. They're negotiating better than humans to get rates
where they need to be.
Speaker 1 (14:58):
We're actually two AI agents people. We just don't know
that yet.
Speaker 2 (15:01):
So yeah, yeah, So I think that I've shadowed some
of these calls. They're phenomenal of what the technology can
actually do. What's so discouraging is that some of these
folks have there, they have deployed this technology and it's
fully implemented. They've reduced headcount by forty percent, yet they're
still kind of break even from a profitability standpoint, which
(15:23):
is which is crazy. And so I think what's kind
of proliferated. A lot of this AI us is I
don't think that the actual folks that have the technology
that are selling it, I don't think they're selling it
at a profitle rate. At some point they're going to
raise the rates they have to because they can't sustain themselves.
(15:44):
And so what it will be interesting is that which
kind of wean folks off these kind of free or
entry level products, like when they actually have to pay
for them, Like, what's going to be the impact at
that point? And that's kind of what I have my
eye on. Ultimately, the folks that I see doing the
best have either partnered with some type of AI specialists
(16:04):
that can create capabilities on the fly, versus buying product
after product which you're just kind of married to that
product at that point. I think that in the interim
period where everyone's still trying to figure this out, I
think the magic is going to be, you know, trying
to partner with groups that can give you more and
(16:26):
more agile approach to the available technologies. And and did
you change when something else becomes more effective?
Speaker 1 (16:34):
Do you think freight brokers that don't lean into tech,
whether it's AI or just you know, because AI has
a lot of meetings. But you know, assuming it's it's
it's not if they're not leaning into tech, are they
going to be able to compete in five years? You
know that the freight broker with the rolodex, a phone
and a pack of cigarettes, you know, like that kind
of an old school broker, Like can they can they
(16:57):
compete against now?
Speaker 2 (16:58):
I don't think they canpet the next eighteen monthsly, quite frankly,
I mean I think that kind of a dead man
walkin right now. They're probably still you know, you know,
dipping into PPP money that was you know, dolled out
four years ago and still have a little bit left
to kind of you know, bridge cash flow gaps. But no,
I don't think that's gonna happen at all. I think
it's going to get even more advanced. So there's a
(17:23):
lot of folks right now. I saw Craig Fuller talk about,
you know, a multiple different freight brokerages probably gonna you know,
self elect out or go bankrupt or do whatever in
the next six to twelve months. I do think that
there's some truth in that, but you know, and that
the vast majority of folks who will be in that
(17:44):
group are folks that have not integrated or adapted to
the realities of where we're at in the industry right now.
Speaker 1 (17:51):
So are those the kind of folks that are you know,
maybe you're sending you an email and saying, hey, we're
we're looking to sell because you know, if if you
can take maybe their book of business and bring it
into a company that has leaned into the tech, you
know that that could really create.
Speaker 2 (18:06):
Some value potentially. I think that that that's part of
the case I think right now, so much of this
is driven about what makes the revenue sticky, what makes
the customer sticky, and the technology is not a major
factor what's driving M and A presently, because I think
everyone else is still trying to figure this out. What
(18:26):
people want. They want new revenue and they want it
to be sticky. So where we see deals getting done
in the freight brokerage, it usually has something that is
very complex, very clunky, and and something that a lot
of people don't want to do because of the complexity
of the move. It's those types of deals you know
(18:48):
that you can if you have those types of relationships.
Those are those are characteristicalistics that if they're involved in
a company, a deal can get done because you know,
somebody can't just show up and take that business away.
There's a relationship there, there's some depth and so you know,
those are the main characteristics that we're seeing right now.
(19:08):
Or if there's barrier to entry or what have you.
But you know, good customer relationships or it could be
access to a new customer that perhaps the buyer could
expand that relationship. Those are those are the main things
versus you know tech.
Speaker 1 (19:21):
But can you give us an example of something that
that's sticky, like a type of a move that that
that that is hard or difficult.
Speaker 2 (19:28):
Yeah, well, we did a deal with Third Coast Logistics.
This is a freight broke which out of Austin, and
you know they had some they were doing these types
of moves where they would go to elementary schools and
they would unload you know that we get there, they'd
have to hand unload various materials, take it into the school.
(19:50):
Very cumbersome, labor intensive, and you know, for a lot
of folks, there's you know, there's safety.
Speaker 1 (19:57):
Elements to that.
Speaker 2 (19:58):
There's there's there's kind of like some protocol all they
have to do. So there's just multiple reasons why if
someone's just trying to turn and burn freight like that, like, well,
I don't want to do that. That's too much. I
don't want to do that. But in doing so, the
people that are actually willing to do it, they can
have more influence over the pricing of that work, have
more profitability, and over time, once that relationship's in place,
(20:19):
the customer is not going to shop that and try
to beat them up on price. So, you know, like
like anything else, like the you know, the the cost
to retain the customers about eleven percent of what it
is to create a new customer. And so I think
that's the main thing that when people are trying to
value these these customers and when they look at these
stickiness or the complexity of these moves. You know, the
(20:39):
more complex, the more clunky in any cases, the better.
Speaker 1 (20:44):
Yeah. So you know, we we we get. You know,
we hear a lot about like health care logistics, how
that is an area suspect the specialty that's needed to
do that? Is that an area where you're seeing more
m and a activity.
Speaker 2 (20:58):
One hundred percent? I mean that that's a big a
focus area. And you think about it too, just from
a growth standpoint, you look at the demographics of the
United States and how many aging baby boomers that we have.
When they start looking at the need to move more freight,
that matches that criteria, that has some barriers to entry
(21:21):
in terms of who's qualified to move it and who isn't,
makes it very, very attractive from an investment standpoint to
try to get that. There's not a ton I mean
from an inventory standpoint, they don't. There's a there's not
a ton of folks who who who do that at
a highlight, who do it at scale and do it
very well. And so when those are opportunities come up,
(21:41):
they usually attract a lot of attention from an m
and a standpoint.
Speaker 1 (21:44):
So when you're when you're talking to your clients and perspective,
clients and and and I know all our crystal balls
are pretty buggy right now. You know what, what are
they telling you about twenty twenty six? You know, as
or either when it comes to rates or supply, you know,
(22:04):
do they seem more optimistic or you know, what is
the mood going into twenty twenty six, Because we're almost
there to be in a blink of an eye, we're
gonna we're going to be celebrating New Years.
Speaker 2 (22:17):
You know, I mentioned, you know, these five very unique
freight periods between twenty one and twenty twenty five, And
right now, I think I'm seeing that, you know, probably
the most the kinder and gentler version of business owners
that I've seen in a while. And I think folks,
you're recognizing that they may get some help. Even if
(22:43):
they do, it may not be a lot. So I
think the expectations are I'd really like to be able
to select who buys this company, have some influence over that,
and I just need conditions to get better than where
they are right now, just to make sure that we
don't leave money on table. So I I those are
some of the main things on the freight brokeer side.
(23:04):
I mean, they need a major uptick for some of
that to make sense. I mean a lot of these
folks trailing to even large companies trailing twelve months ebidas,
you know, break even in some case negative for some
of these folks, and you know that doesn't and that
doesn't represent the quality of their company. That's just the
realities of the on a macro level. So for some
of these folks, some of them don't want to sell.
(23:27):
It's just it's very empowering when they know that if
they want, if they wanted to, they could. So that's
kind of what I'm hearing is like, over the next
twelve months, macro conditions should improve in a way that
where I'm going to have much better strategic options than
I had in twenty twenty five. So it's more of
a sense of relief that if I decide to exit,
(23:48):
I'm probably going to be able to in a way
that's satisfactory. But even if I don't, it's going to
be wonderful to get back to a place where, you know,
just that they feel like that they have more control
over what they've been you know, what they've built in
their companies and how they've invested in it.
Speaker 1 (24:05):
And can you just talk broadly about valuations. I don't
know if it makes more sense to talk about it
per sub segment, but like kind of like where where
are we versus where we've been? You know, you don't
have to give like you know, were we twenty percent
off the peak or fifty percent off the peak? And
when was the peak? And you know, so something like that.
Speaker 2 (24:24):
Yeah, I mean I think that for context here is
that most people are like when when they talk about
the peak, well, what made the peak? I mean, we
had COVID, which we had, you know, we kind of
pushed forward three years worth of demand on goods. I
think I heard Derrek Leathers talking about this on your podcast.
Uh he had a great explanation of it. I'll just
(24:45):
I'll just direct you to go have him explain it.
I think he did a really good job of kind
of explaining you know, how we push pushed all of
this freight movement forward and then it kind of just
dried up. But at the same time, we also effectively
had free debt. So all of that in terms of
kind of created this wild wild West situation that to
(25:06):
me offers no relevance whatsoever as a reference point for
anything like to make sense of. But I think what's
encouraging moving forward is that, you know, we were getting
signals from the fad that we're going to have We
just had interest rate reduction, possibly another four things are
going to stabilize. I think that's going to help. But
the reality is right now, you know, anything that is
(25:28):
you know, commoditized freight, it's very difficult to trade at all.
You know, unless you're like four or five hundred trucks.
The deal that I mentioned with the Texas transition, that
was a very healthy multiple on that deal. Other deals
that are specialized, I think they're getting healthy multiples. Freight broke,
which is probably the one that across the board where
(25:49):
I would say is probably struggling the most because I
think there is the market was traumatized a little bit
because they went the guy a little bit too crazy
between twenty two twenty three. So I do I do
think that there has been a specific muting on valuations
for that specific category, and I think that that's probably
(26:11):
good and and I and I also think it's it
reflects the the uncertainty about the relevance of that business
model frankly over the next five years, like how is
it going to evolve and can you bank on it
from a from a value standpoint in the way that
you have in the past, particularly if you don't have scale.
Speaker 1 (26:33):
And so.
Speaker 2 (26:36):
With the emergence of so much technology in that space,
I think rightfully so, folks are a little bit concerned
about how how much to spend and how much to invest,
how high to value those companies.
Speaker 1 (26:47):
So when you're working on a merger or you know,
an acquisition, and it's not like you know, a financial buyer,
it's it's a it's a strategic buyer or something. What
what do you find that a deal has to have
for it to work, because obviously, you know you do
a post more of them a year later, it could
(27:07):
have been a good deal and it could have been
a bad deal. So like, what what makes a good deal?
Speaker 2 (27:12):
The one characteristic where I think has the highest core
or the greatest correlation to post transaction success, if that's
what you're asking, Yeah, is the strength of the target
company's management team. And what I mean by that?
Speaker 1 (27:28):
And we did a deal with.
Speaker 2 (27:32):
Blue Jay Capital and triedent private equity group for large
courier company out of Minneapolis, And in my podcast is
interviewed in Pierre Matthew and he talks about this is
like when you know, when private equity is viewing an investment,
the number one thing is the strength of the management team.
But also what is the capability. It's not not their
(27:55):
strength in today, it's what is their capacity to grow
the business two three to four x. And I think
that's where a lot of folks when they're acquiring, particularly
if it's a platform investment. They overestimate that management team's
ability to scale the company moving forward, and so you know,
(28:16):
you know what ends up happening is they end up
having to plug and play year two. They have to
get new leadership, and that is very disruptive and it
puts the overall return at risk on the on the investment.
So that I would say, without question, the highest correlation,
the factor that correlates to the greatest success is that
you just have an all star management team that has
(28:37):
presently the ability to go three to four x that
that company without having a lot of additional cap They
just have the ability, they have the knowledge. They't that
maybe they've done it before in a different organization. But
that's probably the most valuable way, the most valuable thing
to creating value, and it's also the surest way to
de risk that transition of ownership gotcha.
Speaker 1 (28:58):
So there's been a lot of action obviously Washington that
have impacted supply chains, good and bad. You know, when
we're looking at capacity in the trucking market, which you
know obviously there needs to be flushed out a little bit.
There's some things going on, whether it's the English language
proficiency enforcement non domicile cd ls or or you know,
(29:18):
cracking down on cabotage. What what what do you think
that's do you think that's gonna really make a mark
on trucking because some some folks have been pretty, uh
extremely bullish on on you know, what could happen uh
to rates because of that, and some people have been
a little more cautious. I guess where do you where
do you Where do you come in on that?
Speaker 2 (29:40):
I think where I come in is that, you know,
I think these things kind of become a political issue,
which I'm just like, Hey, usually when our government, our
government enforces the laws that are designed to protect people
and companies, we're generally more healthy and we perform better.
So to me, it's just like I don't I don't
have like a like this is going to be this
silver bullet. But but yes, absolutely this this will help
(30:05):
in the short and long term.
Speaker 1 (30:07):
But there's.
Speaker 2 (30:09):
You know, to me, when you've got demand down or
volumes down eighteen percent, that the demand is the main issue.
Like we like, there's got to be more demand in
the space to actually affect you know, freight rates presently.
So so to me, like there's a disproportionate amount of
attention on this. I think it's I don't think there
(30:30):
should be any conversation that this should be happening. It's
from a safety standpoint and for all just you know,
credibility for government enforced laws. But I think I'm a
little bit more conservative on what I think it's actually
going to do.
Speaker 1 (30:46):
And so you mentioned so it's so you view it
as more on the demand side. What has to happen
for that demand to pick up? I mean, is it
just like, let's hope these interest rate cuts spur a
little more economic growth because you know, GDP expectations are
pretty mild for the next two years.
Speaker 2 (31:07):
Well, I think a lot of this is has already
put in motion. You know, the one big beautiful bill
which we talked about at length that the American Truck
Association was on a panel with Rant Thornton in a
variety of other folks talking about the impact of this.
This is going to unlock tremendous investment in the United States.
It's going to be helpful, but we still need stability
(31:29):
in the marketplace. There's still some trade deals that need
to get done. There's still some stability that has to
take place, and I think we're probably six to twelve
months away from from that really happening, from us being
able to fully benefit from the intent of the one
bit you know, all the factors in the one big
beautiful bill. So I do believe all those things in
(31:50):
combination will be significant. It's it's just going to take
a little bit more.
Speaker 1 (31:55):
Time, gotcha. So I remember I read in your bio
that you're you come from music before you got into
investment banking. That did I read that?
Speaker 2 (32:06):
Oh? Yeah, well that was one of the things I
was trying to do to avoid getting into the transportation industry.
But yeah, I was a music guy and another life
of the songwriter had a music publishing company.
Speaker 1 (32:16):
Okay, And and you're you're based in outside of Nashville,
So like are you was it country music?
Speaker 2 (32:23):
Country?
Speaker 1 (32:23):
Yeah?
Speaker 2 (32:24):
Country music? You know, I I uh, I came out
here and you know, I met some of the most
amazing people, some of the most talented people in the world,
quite frankly, and uh, pretty remarkable experience, and you know,
blessed to call a lot of those folks friends to
this day. My greatest victory in music, though, was meeting
(32:45):
my wife, who was a songwriter as well. And so
once I got once I got that locked down, Lee,
I was like, hey, all those years learning how to
play guitar finally paid off and so uh so that so.
Speaker 1 (32:56):
It all worked out pretty well good. I'm glad. And
so have you written any any songs about trucking or
transports that have been published or recorded?
Speaker 2 (33:05):
No, I don't, I don't think so. I wrote a
song a long time ago. I.
Speaker 1 (33:11):
Uh, we have this.
Speaker 2 (33:13):
We have this truck in our family. I bought it
when I was fifteen years old. Okay, we have passed
it or I sold it to my brother, he sold
it back to me. I sold it to my dad.
It's a seventy nine for pickup truck. And so a
long time ago we wrote a song about that truck
called Old Brown and so that that was kind of fun,
but that that's probably my one trucking song.
Speaker 1 (33:34):
All right, great, I'm assuming you still strum the guitar,
you know, and you're not doing deals.
Speaker 2 (33:40):
Well yeah, you know. I still get the isg from
time to timely for sure.
Speaker 1 (33:44):
Okay, and so you know, I do like to ask
people how they got into freight transportation. But you mentioned
at the top of the show that you know, you're
it's really in your blood. When did you realize that
this is something that you wanted to do? You know,
it kind of like drew you back into I guess
the family business, if you will.
Speaker 2 (34:07):
When I got back in and I was just like,
you know, coming out of the gypsy life and I
just needed to just needed to make some money. Yeah,
but I remember watching my dad support a handful of
business owners and guided them through, you know, the largest
financial event of their lifetime, and then having a front
(34:28):
row seat to watch those guys use that liquidity event,
bless their communities, bless their neighbors, do all kinds of
remarkable things. And because I don't know, I just think
our industry attracts super generous people that are other centered,
and I'm sure you've met a ton of them. But
(34:51):
and so for me, like when you get a little
taste of that, you're like, man, this is pretty special
thing to be a part of. And then I just
kind of fell in love with it and just the
idea that you know, may I've got a unique calling
to help these these folks create value and advance of
a sale and then you know, help them navigate something
that you know, they may know trucking and may be
(35:12):
the very best the best, but they've probably never done this,
and so it's it really is a great privilege to
help them navigate that and then, like I said, have
that front row seat to see what they do in
it in the next chapter of lives.
Speaker 1 (35:24):
Gotcha, yep. And then I also like to ask this
question of most of my guests towards the end, is
there like a do you have like a favorite book
on transportation or leadership or finance for that matter. You know,
I think a lot of people that listen to the
podcast or are generalists and they would like to learn more,
whether it's about the trucking industry or transportation or even
(35:47):
you know, you know, h M and a activity.
Speaker 2 (35:51):
Well a couple I would say. I read a great
book book a while back called Door to Door and
this is probably it's a little dated. It's it might
be ten year years old now. It was just a
fascinating way to think about kind of the future of transportation,
why we do things the way that we do. That
was one that was pretty interesting. I'm always looking at
(36:12):
leadership books. A couple of things I've been working on
right now one is the power of full engagement. I'm
getting a lot of value from that. About to wrap
that book up, it's just talking about managing energy over time,
and I think that you know, when leaders within transportation logistics,
they don't have any more time available, so figuring out
how to manage energy is a more effective way to
(36:32):
think about production. And then lastly, my wife turned me
on this book a long time ago called Boundaries. It's
psychologist doctor Henry Cloud, and it really just talks about
having really healthy relationships. And if you think about it
from a leadership standpoint, if you can figure out how
to have extremely healthy relationships that are boundaried that you
(36:57):
can speak authentically what's true and and in a loving
way with the people that are the twelve people that
are that are closest to you, there's a pretty chance
that pretty much everything and you know beyond that, it's
going to work out pretty well. And so I would
highly recommend that to the people in a leadership position
because I think it does have some amazing concepts to
(37:18):
help you know, marriages, relationships with your boss, with your coworkers.
Very impactful for me for sure.
Speaker 1 (37:27):
All right, great, well, Spencer, I really want to thank
you for your time and insights today. I really appreciated
your time and I really enjoyed the conversation, so thank
you so much. Likewisely, and I want to thank you
for tuning in. If you liked the episode, please subscribe
and leave a review. We've lined up a number of
great guests for the podcast, so please check back to
your conversations with these executives, shippers, regulators, and decision makers
(37:50):
within the freight markets. Also, if you want to learn
more about the freight transportation markets, check out our work
on the Bloomberg Terminal, at b I Go and on
social media. This is Lee Glasgow signing up. Thanks for
talking transports with me. Speak to you soon. Bye bye,
Host
Lee Klaskow
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Ruthie's Table 4
For more than 30 years The River Cafe in London, has been the home-from-home of artists, architects, designers, actors, collectors, writers, activists, and politicians. Michael Caine, Glenn Close, JJ Abrams, Steve McQueen, Victoria and David Beckham, and Lily Allen, are just some of the people who love to call The River Cafe home. On River Cafe Table 4, Rogers sits down with her customers—who have become friends—to talk about food memories. Table 4 explores how food impacts every aspect of our lives. “Foods is politics, food is cultural, food is how you express love, food is about your heritage, it defines who you and who you want to be,” says Rogers. Each week, Rogers invites her guest to reminisce about family suppers and first dates, what they cook, how they eat when performing, the restaurants they choose, and what food they seek when they need comfort. And to punctuate each episode of Table 4, guests such as Ralph Fiennes, Emily Blunt, and Alfonso Cuarón, read their favourite recipe from one of the best-selling River Cafe cookbooks. Table 4 itself, is situated near The River Cafe’s open kitchen, close to the bright pink wood-fired oven and next to the glossy yellow pass, where Ruthie oversees the restaurant. You are invited to take a seat at this intimate table and join the conversation. For more information, recipes, and ingredients, go to https://shoptherivercafe.co.uk/ Web: https://rivercafe.co.uk/ Instagram: www.instagram.com/therivercafelondon/ Facebook: https://en-gb.facebook.com/therivercafelondon/ For more podcasts from iHeartRadio, visit the iheartradio app, apple podcasts, or wherever you listen to your favorite shows. Learn more about your ad-choices at https://www.iheartpodcastnetwork.com
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.