citizenship . For now , idealism is outpacing the realities of execution and impact of ESG demands .”
Making Your Company Attractive to Investors
For last-mile providers interested in attracting investors , Tenney offers three tips :
• Watch your customer concentration
• Differentiate yourself by showcasing your niche expertise
• Reduce owner dependence .
Customer Concentration : “ Creating good customer relationships is the key to success in the last-mile , and that can lead to getting more and more business from a small number of customers . If too much of your business comes from a limited number of customers , investors will be wary ,” Tenney cautions . “ High customer concentration is very common in the last-mile space . We ’ ve sold final-mile companies with 90 % customer concentration . That can be a problem for investors . They want to build value and de-risk the companies they invest in . They want to see growth in a way that spreads risks across different customers . If lastmile providers can keep customer concentration to less than 30 % per customer , it will be a huge differentiator between them and carriers with 80 to 90 % customer concentration . They ’ ll be valued very differently because there ’ s less risk if something goes wrong . People who want to build value should think critically and strategically about developing growth without increasing customer concentration .”
Niche Expertise : While a heavy business concentration on one customer is not a plus , having many customers in a specific niche is a plus . “ Those still getting deals funded are companies with some type of niche expertise ,” says Tenney .
“ If your company has a niche expertise with a very specific value differentiator if it ’ s not tied up in one customer . If you ’ ve got a dozen customers within healthcare , that is a competitive advantage that trickles down to the bottom line . And investors see that as valuable .”
Owner Dependence : Companies that want to attract investors should equip their leadership team to function without the owner . “ Mastery of the ways to deal with problems and ways to be successful should not rest solely with the owner ,” Tenney cautions . “ If all that knowledge is concentrated in the owner ’ s head , it becomes extremely risky for an investor . If that owner gets hit by a bus , that institutional knowledge is gone . Companies that attract large amounts of value for their businesses are the ones that systematically equip their leadership teams to function at an elite level without the owner .”
Staying Informed . Staying Agile
According to Tenney , the winners in this challenging environment will be those who equip themselves to surf the waves of change . “ This is an industry that ’ s very exciting but also very unforgiving ,” he says . “ The leaders who are going to win the future in this rapidly-changing environment are the ones who stay most informed and most agile . That is the key to building and protecting business value .
Tenney Group is an industry-specialized M & A advisory firm that has been dedicated to the transportation and logistics space since 1973 . The firm ’ s core service is sell-side representation for companies with approx . $ 20-300M in annual revenue . For more information , visit thetenneygroup . com .
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All kinds of companies are looking for any type of advantage synergistically via acquisition . They are looking for help to make this process more efficient to meet escalating consumer demand .
summer 2023 I customized logistics & delivery Magazine 15