Echo Global Logistics is going private, will be acquired by The Jordan Company

Chicago-based third-party logistics and technology-enabled transportation services provider Echo Global Logistics announced late last week 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.

Echo officials said that Echo Global Logistics will become a private company, adding that this transaction will provide the company with additional resources and greater flexibility to continue to build its technology and data science platform, while also augmenting its value proposition for shippers and carriers. And they also noted that Echo will see benefits from The Jordan Company’s operating capabilities, capital support, and sector expertise.

“I'm thrilled to partner with TJC as they bring significant expertise and industry experience to enable Echo to further accelerate our success in the market,” said Doug Waggoner, Chairman of the Board of Directors and Chief Executive Officer at Echo, in a statement. “In addition, having an experienced financial partner, with resources to fund continued growth, will result in a more rapid expansion of Echo's supply chain capabilities, including all of the automation planned to enable both our people and our digital freight marketplace.”

In an interview with LM earlier this month, Waggoner said there is a confluence of factors that are heating up the M&A market.  

“Start with the fact that nearly every company in our space has had a tremendous year, in terms of growth and earnings,” he said. “So, if you were inclined be a seller at some point in your future, now is probably the best time to do it because you are going to be valued on your trailing 12 months and probably have a good forecast for the remainder of 2021, and will capture the highest value. If the market should turn to the downside of the cycle in the next 18 months and you wait until then, you have waited too long and now could maximize the value of selling your company…you are going to have to wait for the next cycle. I think that is kind of factor number one. Factor number two is, for strategic buyers like Echo, we are sitting on a lot of cash and have paid down our debt, our stock price is up a little bit, and we have had good organic growth. You could supplement that with some M&A growth and add some strategic capabilities. On the buy side, we are probably like many companies as an interested buyer looking for opportunities. The third factor is you have private equity firms, and they are doing what private equity firms do—raising funds of up to $2 billion-to-$4 billion, a lot of money. They are looking for deals. Banks are willing to loan at a pretty high multiple, and they are also offering very good interest rates. If you are private equity buyer and you are sitting on a mountain of cash and have access to all the cheap debt you want, there are a lot of deals that look pretty good, and you might even pay up for them a little bit, because you can and money is cheap and you have lots of it.”

Ben Gordon, Managing Partner of Cambridge Capital, an investor in niche supply chain leaders and also Managing Partner of BGSA Holdings, a leading mergers and acquisitions advisory firm focused on the transportation, logistics, and supply chain technology sector, said that this deal reflects a few core points.

“First, it showcases the continued financial markets' interest in logistics,” he explained. “Second, it highlights the fact that high growth logistics companies can command strong valuations. Third, it underscores the importance of both technology and services. Echo invested a lot of time and effort in building out its systems, which was an important part of its differentiation.”

Echo had a very strong second quarter earnings performance, with quarterly revenue, at $935 million, up 82% annually, marking its fourth straight quarter of record revenue. The company had brokerage revenues of $717 million, record managed transportation revenues of $218 million, record truckload revenues of $687 million and record LTL revenues of $218 million.