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Successful M&A Strategies for the Logistics Industry

Having completed 16 acquisitions of small logistics companies in the past seven years, Echo Global Logistics knows something about successful takeover strategies. CEO Doug Waggoner talks about the company's growth-through-acquisition initiatives.

If you want to be a national player in the transportation management and brokerage space, you have to have scale and a wide reach for your customers, says Waggoner. “There are thousands of small players out there and many of them do fine in their geographic niche, but if you want to be a 48-state, ubiquitous coverage player, you have to scale up on the sourcing side,” he says.

Echo Global Logistics has acquired scale by buying smaller companies – a total of 16 in the past seven years. “This strategy makes a lot of sense for us because it gives us geographic coverage, a bigger customer base and additional sales and feet on the street. I see other companies following the same approach,” he says.

The companies that Echo has acquired generally are small brokerage and logistics businesses. “We look for owners who want to take a few chips off the table but who want to continue to run their business as a part of Echo,” he says.

One of the advantages of doing smaller deals is that there is less integration risk, Waggoner says. “After 16 deals, we have some pretty good practices for blending these companies into our operations,” he says.

Echo’s focus on acquisition strategies also extends to supply chain talent. “I believe any company is only as good as its people and that starts at the top and goes all way down to front-line employees,” he says. “We have an entrepreneurial culture and finding the right people, incenting them and keeping them motivated and creative is an important part of our strategy.”

When looking for talent, domain expertise in a transportation mode or industry vertical is crucial, he says. “No one person can do everything so we look for a blend of talent that is complementary, that will come together as a multi-talented, multi-faceted team.”

Echo Global Logistics hires about 40 people a month right out of college, with degrees in both supply chain and other areas of study. These new hires go through a six-month training program covering sales, operations and sourcing. “By the end of that time we have an idea of what they are good at and they have an idea about what they want to do,” says Waggoner. “This enables us to place them in jobs where they perform well, which is good for retention.”

Training continues throughout an employee’s career at Echo because it makes for better workers and better job satisfaction, says Waggoner. “This is especially true for the millennial generation,” he says. “They want a career in which they can continue to learn and develop – it is about more than money for them.”

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