tives are meaningful . By some estimates , last-mile can represent up to 50 % of a shipper ’ s total transportation expense and 75 % of customers will spend more and be loyal to brands that offer an excellent last-mile experience .
End-Market Focus
Perhaps the single most significant determinant of investor interest will continue to be the end-market focus and customer mix . This is because investment committees at private equity firms and strategic buyers like to underwrite revenue “ visibility ” and growth potential . End markets with stable demand profiles and large addressable markets can be a proxy for visibility in a last-mile sector that does not typically use take-or-pay contracts with shipper customers .
For example , expenditures on healthcare and related services remain relatively stable in a downturn compared to more cyclical industries , and there are stringent requirements a last-mile provider must meet given government regulations and shipper preferences ( e . g ., cold-chain custody ). As a result , healthcare is currently the sector-du-jour , with recent transaction examples including Water Street Healthcare Partners ’ acquisition of MedSpeed in August 2024 , Norwest Equity Partners ’ acquisition of Nationwide Organ Recovery Transport Alliance in August 2023 , and Bluejay Capital Partners ’ acquisition of Priority Courier Experts in July 2023 . Other companies like New Jersey ’ s 24 / 7 Enterprises have a differentiated proposition , serving primarily government agencies with healthcare-related needs under long-term contracts . Finally , UPS ( NYSE : UPS ) is on record telling investors they will double healthcare revenue from $ 10 billion to $ 20 billion in 2026 , both organically and through acquisitions .
Similarly , companies operating in the big and bulky space should continue to garner significant interest given the high level of specialization required to deliver and install those items . Recent examples include Greenbriar Equity ’ s acquisition of FragilePak in 2021 , Hub Group ’ s acquisition of Forward Air Final Mile in December 2023 , and HIG ’ s acquisition of DX Group in January 2024 . Certain other end markets may garner a more binary reaction from investors if they are perceived as cyclical and / or in secular decline ( e . g ., document couriers , automotive , etc .). The lesson for business owners is to invest in relationships with customers and capabilities that will provide more exposure to specialized , recession-resistant , and growing end markets .
Customer Complexion
Regardless of a company ’ s end-market focus , investors will focus on several other important vectors of customer complexion : wallet share , retention , and concentration .
First , what is your wallet share with existing customers ( e . g ., how much of their total last-mile spend do you control )? Ideally , you have a strong — but not 100 %— wallet share , which helps demonstrate you are a preferred provider but leaves room for organic growth with existing customers . Also , does the freight come from other 3PLs or directly from shippers ? All else equal , controlling the relationship directly with the shipper is better .
Second , investors like to see sustained high retention rates and NPS scores evidencing increasing points of stickiness with customers over time . If there is customer churn , make sure you can ar-
44 customized logistics & delivery Magazine I fall / winter 2024