The size of the private equity market is huge.
Assets under management have grown from just $30 billion to $4 trillion over the past two decades.
In the last few years the news has been inundated with “Private Equity Firm Invests in Logistics Company” types of articles. We have all seen it before and most recently here at BlueGrace Logistics where Warburg Pincus invested $255 million for a minority stake in the company. It’s a daily conversation in this space and will continue to be, as Third Party Logistics (3PL) start-ups build momentum.
But what if we twisted the story?
What if BlueGrace Logistics could assist with an acquisition from a private equity group? What if we could aid them in reaching their ROIC in a timely fashion?
These types of transactions aren’t always front and center. For example – a Private Equity Firm is considering investing in a restaurant supply company and this company has been operating their supply chain at a dismal pace with an inefficient system and extremely high costs. When identifying proprietary opportunities, a PEG should consider partnering with a 3PL.
According to the State of the Logistics Market Report, two-thirds of US total logistics costs are attributed to transportation spend. Additional industry reports further corroborate the high cost of transportation spend citing it as either the #1 or #2 largest line item cost driver for many manufacturers.
Private Equity Groups can often lack the capabilities, sophistication, experience or resources to truly transform this major line item cost into a strategic competitive advantage over their competition. For many of these clients, as business grows, transportation can exceed its internal capacity and resources thus proving difficulty to manage its day-to-day transportation function on its own. As such, partnering with a logistics provider like BlueGrace can prove beneficial.
Before The Investment:
We review your data before the investment to determine potential issues.
No cost consultation – with no upfront cost to the private equity group, VC or even the business being acquired, we can immediately offer:
- Introductory discovery call
- Historical data review
- Engineering reports of data
- Potential transportation issues
- Integration opportunities
After The Investment:
After the investment is finalized, an ongoing partnership would ensue and BlueGrace Logistics would continue to work with the PEG to grow profits and reduce costs.
BlueGrace clients on average, save 8% on freight costs.
We would work directly with the investment to provide ongoing logistics expertise, dedicated service reps, ERP systems integration, KPI and Goal setting, and Business Intelligence reporting.
In the case of this restaurant supply company, we were given a set of parameters and a timeline to achieve certain cost reductions and integrations.
We were able to provide 12% reduction in transportation costs – a $300k in annual savings. The PEG was also able to see their ROI within 11 months of the acquisition.
BlueGrace can vet and bring acquisition opportunities into shared services.
BlueGrace can vet acquisition opportunities for our clients. If the customer decides to acquire the prospective business BlueGrace will bring them into shared transportation services.
It doesn’t end with reporting.
BlueGrace Logistics will provide the investment and PEG with suggestions and plans to execute the changes. Lost profitability, warehouse relocation studies, consolidate shipments and much more will be addressed in order to cut costs.
BlueGrace provides scalability for PEGs to achieve their aggressive cost cutting and profit goals without labor or technology investments.
Our expertise and processes provide PEGs with the bandwidth to operate efficiently and drive direct cost reduction through our procurement and dedicated management.
It’s a partnership worth investing in.
When a private equity group is considering acquiring any company, especially a manufacturer, a 3PL with a track record of success should definitely be brought into the mix. BlueGrace Logistics brings a tremendous amount of knowledge and skill to quickly assess situations which in turn generates substantial savings and performance improvements to supply chains.