Phoenix International Sale of the Company
Founded in 1979, Phoenix International Freight Services, Ltd. is the largest privately-held independent non-asset-based international freight forwarder and global supply-chain-management company based in the United States. In its fiscal year ended June 30, 2012, the company reported gross revenues of over $800 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $51 million.
In 2006, Phoenix received an unsolicited purchase offer from a global logistics company at a highly-attractive valuation. Although negotiations eventually collapsed, the experience served notice to the major shareholders that they could continue to improve their business and should also develop an exit strategy. The founder was approaching retirement age and was beginning to consider estate planning issues. The three other senior executive shareholders, who were younger, wanted to continue to build the company, but also desired to diversify their wealth.
The four executive shareholders, who collectively owned over 90% of the shares of Phoenix, recognized that they needed to work with an investment bank that would dedicate the necessary resources over a number of years to assist the company in preparing itself for sale, expose them to available strategic alternatives, put their interest ahead of the bankβs, and be capable of marketing Phoenix successfully at a high valuation. With these criteria in mind, Phoenix selected Republic Partners as its sole strategic and financial advisor.
Although Phoenix had grown steadily and operated profitably throughout its history, the talented executive team ran the company like many entrepreneurs, intuitively, with a trusted team and with few formalized metrics and reports. The shareholders realized that in order to achieve world-class status and sell the company at their targeted valuation, they had to implement myriad changes which included changing the legal structure of foreign subsidiaries and formalizing operational and financial reports.
In addition to making the organizational adjustments, the companyβs leadership committed itself to growing Phoenix at its historic rate despite a difficult economic climate that challenged the companyβs ability to generate the earnings growth necessary to justify the targeted valuation. Finally, the major shareholders were determined to sell only to a buyer who would preserve the Phoenix culture, core values, and legacy that had been built over the past 30-plus years.
Republic Partnersβ Solution
Republic Partners worked closely with Phoenix for five years, meeting regularly with the executives to review and offer advice with regard to the companyβs progress on its strategic plan, financial performance, and organizational structure. Republic Partners visited Phoenix offices in the U.S. and Asia, developing the in-depth knowledge of the companyβs business model, managerial talent, and growth opportunities that is essential to market the company effectively. Throughout this period, Republic Partners helped the major shareholders assess their strategic alternatives, evaluate a variety of processes and update the list of potential acquirers while keeping them informed of the climate for mergers and acquisitions. By late 2011, it was clear that Phoenix had achieved its earnings growth and transformational goals and was prepared to go to market.
Republic Partners ran the sale process from the time the Phoenix board of directors approved the recommendation to begin marketing the company on a global basis to the signing of a purchase agreement. The major shareholders were advised to keep an open mind and to eliminate only a few potential buyers that were incompatible with the Phoenix culture. Eventually, Republic Partners contacted a large number of potential strategic and financial buyers in the U.S., Europe, and Asia. The long working relationship had prepared both Phoenix and Republic Partners well. The process was carried out according to schedule. On September 25, 2012, Phoenix and C.H. Robinson Worldwide (CHRW) announced that C.H. Robinson had agreed to acquire Phoenix for $571.5 million in cash and approximately $63.5 million in CHRW stock. The transaction is expected to close in the fourth quarter of 2012.