Echo’s Waggoner talks about company’s move from public to private

As has been the case in recent weeks—and beyond—there has been a flurry of activity in the freight transportation, supply chain, and logistics sectors, when it comes to mergers and acquisition (M&A) activity.

It is a topic that has been covered extensively in the pages of LM and on this website, to be sure. At any given time, it seems, there is a deal being made. Look no further than Uber Freight’s $2.5 billion acquisition of Transplace in July or Knight-Swift entering the less-than-truckload (market), also this summer, with its acquisition of AAA Cooper.

For those thinking that there may be a respite of M&A activity coming, well, they were wrong. In the last week alone, UPS acquired same-day courier delivery services provider Roadie, to get better access into the last-mile market. And Chicago-based Echo Global Logistics also joined the fray, albeit in a different way, going from a publicly-traded company to a private company, with its announcement late last week that it has entered into a definitive agreement to be acquired by global private equity firm The Jordan Company for $48.25 per share, with an equity value of roughly $1.3 billion.

And the Echo deal is what I will focus on for the balance of this column. In a conversation I had this week with the company’s chairman and CEO Doug Waggoner, he called this deal a “new chapter in the Echo story.”

Established in 2005 and going public in 2009, Waggoner explained that there are benefits in being a public company, in terms of the attention a public company receives, such as through media coverage and also daily stock price.

“I think that being public was good for us,” he said. “It sometimes made us look bigger than we really were. Our revenue, when we went public in 2009, was $260 million, and, in 2014, we hit $1 billion. In 2018, we hit $2 billion, and this year, we are on track for more than $3 billion. The other side of it is being public has some challenges sometimes. There are shareholder expectations, which tend to be on a short-term horizon, and they are always waiting for the next earnings call to see how it is going. It tends to make you focus your strategy on more of a short-term timeline, which is really not always the best way to run a company, especially when you are making investments in things like technology, people, and data science. You want to be able to make those investments in a given time and produce results and ROI. As a private company, I think that is going to be something we are going to be able to do more of, because we are making those types of investments.”

What’s more, having a private equity owner that is understanding of those investments and shares in the vision and believes in what the company is doing is going to patiently wait for those results to happen somewhere in the not-too-distant future, he explained.

As for what going private will mean for Echo’s shipper and carrier customers, Waggoner was direct, saying that in the short-term, hopefully, they will not notice any differences.

“We are not going to change how we do business,” he said. “In fact, our mantra throughout this transition has been ‘business as usual.’ I would hope a shipper or carrier would not even notice. But I do think what they will notice over the longer term is that we are continuing to invest in our technology. With carriers, we always focus on how we can be easy to do business with…we want to be the logistics company of choice for trucking companies that want to make their capacity available. And if we are easy to do business with—and treat them right and fairly—then we become really good partners. I think our investments are going to make us better at that than we already are. For shippers, it is all about execution. Shippers want great service, a fair price, and they want transparency, execution, and service recoveries when something gets broken or does not go according to plan. A lot of the technology investments we are working on will give them what I call proactive customer service.”

While we often seen a large company buying another company, it is usually to enter a new market, increase a specific service offering, increase IT capabilities, or access new geographic regions, among other drivers. In this case, with Echo Global Logistics going private, it is a different approach, sure, but no less effective.

The ongoing spate of M&A deals is not likely to abate anytime soon, especially with companies, in many cases, trying new things and doing what is needed to gain a competitive edge, as well as augment service offerings. Maybe Echo will give other public companies in this space a blueprint to do the same. Stay tuned.