Not a week goes by that Mark DiBlasi does not receive contact from at least half a dozen companies eager for Roadrunner Transportation Systems Inc.'s consideration of an acquisition opportunity.
Within the past year, the Cudahy-based transportation and logistics services provider has acquired six companies. Since 2005, the company has made 28 acquisitions.
Thanks, in part, to this strategic push behind acquisitions, Roadrunner tipped the $1 billion mark in revenues last year, according to DiBlasi, president and chief executive officer of the company.
"Through acquisitions and then organic growth within those acquisitions, we've been able to take the company from about a $150 million company back in 2005 to last year we did about $1.1 billion in revenues and this year we'll do close to $1.4 billion in revenues," DiBlasi said.
And through the portfolio of acquisitions Roadrunner has made in the last eight years, it has significantly expanded its services from focusing almost exclusively on long-haul less than truckload (LTL) services to offering a much broader menu of transportation options.
[caption id="V5-312139977.jpg" align="align" width="440"] DiBlasi[/caption]
"That's how we've built out the services we provide," DiBlasi said. "We've acquired companies in truckload, truckload logistics, truckload services, intermodal services, international services, freight consolidation, inventory management, warehousing services, (and) transportation management solutions. So we've really built out the services we provide to be a full-service transportation provider."
For example, in 2011 Roadrunner acquired a company called Bruenger Trucking out of Wichita, Kan., that specialized in truckload services. Since then, Roadrunner has acquired five additional companies well-versed in truckload services to enhance that particular offering.
"Customers today want to use a carrier that can provide a lot more than just one service, and they will migrate to those companies that provide multiple services," said DiBlasi, who is a near 35-year veteran of the transportation industry.
By adding new services and cross selling those services to existing customers at a competitive price, Roadrunner has generated a significant amount of organic growth in recent years. DiBlasi credits two-thirds of the company's rapid growth to strategic acquisitions and the other third to organic growth generated largely by those acquisitions and the drive to cross-sell services.
"So you're not out making cold calls on new businesses," DiBlasi said. "You're actually selling your new services to existing businesses, which is much easier to do than a cold call, and that generates organic growth."
The right targets
Besides gravitating toward companies that can add a service or complement one of its existing services, Roadrunner also seeks to acquire companies that are non-asset or light asset in their business model, companies that are going to keep the management team intact after the close of the transaction, companies that are going to be immediately accretive to Roadrunner's earnings, and perhaps most importantly, companies that are going to have a strong cultural fit with Roadrunner.
"In fact, we will walk away from a deal, even if it looks really good financially or operationally," DiBlasi said. "If we don't think there's a good strong cultural fit between us – our management team and the management team we're acquiring – we'll walk away from the deal."
The company has walked away from a deal because of a lack of cultural cohesion three or four times in the past three years, according to DiBlasi.
At Roadrunner, which earlier this year was ranked #28 on Fortune 100's list of fastest growing companies, corporate culture among its management team, 2,900 employees and 3,500 independent contractors is marked by "high integrity" and "Midwestern values."
"A lot of entrepreneurs like the fact that they're going to sell to a company that's going to maintain the business that they built for 20 or 30 years rather than…sell it to a company that's just going to acquire a customer base and then eliminate the operations of a company that's acquired," DiBlasi said. "So that goes a long way with the entrepreneur or the owner of a company that we've acquired."
Poised for more growth
In an industry dominated by slow growth companies, Roadrunner's formula for success, DiBlasi said, is largely defined by the strength of its acquisition profile and the company's ability to partner effectively with the entrepreneurs of the companies that it acquires. Typically, those entrepreneurs continue running their acquired companies over the course of two to five years with elevated goals assigned by Roadrunner. Those goals motivate them to stay "focused on continuing to grow the business" throughout the transition in leadership, DiBlasi said.
Even with the company's tremendous growth in a stagnant economy, DiBlasi is eager to see what strides Roadrunner could make in a much stronger economy.
"Transportation in general is not high growth (and) has not been for the last few years, simply because of the economy,"DiBlasi said. "And we'd like to see what we can do with a robust economy in terms of growth, let alone the slow growth economy we've experienced for the last five years."
Looking ahead, DiBlasi projects that within the next one to three years Roadrunner will evolve into a multibillion dollar company as it continues its aggressive growth strategy through new acquisitions and high expectations for organic growth.
And with 30 to 40 companies currently in various stages of due diligence of the acquisition process, Roadrunner may close out yet another acquisition before the end of the calendar year.
"I can tell you that we have a very significant pipeline of potential acquisitions," DiBlasi said. "They are in various stages of due diligence. There's a chance that we will complete another deal before the end of the year. If not, then we will have a fairly significant amount of activity in the first quarter of next year."