Market Truffle Hound Searching for Value Everywhere
Financial gravity is finally hitting Logistics 3PL/Software Combos with the news from ShipHero in the last week.
There are very few companies that are able to do what Amazon has done -- combine software and data assets with physical logistics assets into one company. ShipHero made a move this week which was reported in that they split out their 3PL business into a new arm called LVK.
Kudos to them, they have a valuable asset with a different valuation structure that can live on, and perhaps be combined with another entity later.
What's the valuation multiple on a 3PL? Not too much.
What's the valuation of a SaaS company? Much higher.
The move makes sense - it's only a wonder it did not happen sooner. I think this kind of reality will hit a lot of rollup businesses, aggregators, and multi-part business models. Like the 80s corporate raiders, if there is value to be found somewhere (like Macy's real estate) investors will root and root like a truffle hound (or maybe a truffle pig?) until they find it.
Many 3PLs acquired software assets in the last 5 years - to be honest most of those software assets are worthless because there were small struggling companies to begin with, but ... it was software! and we have cash!
Reality continues to set in across the landscape. Unlock valuation. Cut your churn in half. Figure out your strategy. And grow -- or else at this point. There are only so many bullets in the gun. Better do it with determination.
