Peoples Services Inc. has shifted gears with third-generation President and CEO Douglas Sibila behind the wheel. Gone are the days when organic growth was sufficient to fuel the 104-year-old company. Now acquisitions are key to success. Fortunately for Peoples, the timing is right, and its reputation and old-fashioned who-you-know networking are driving opportunity.
“A lot of baby boomers are starting to retire,” Sibila says. “They’re looking to possibly sell and fortunately, I’m at a young enough age that I am interested in acquiring. There are fewer of us in my age range than baby boomers, so that creates some opportunities from our perspective.”
The number of operators in the segmented logistics and warehousing industry who are looking to exit could rise given the general success over the past few years of companies in this industry. Word has spread about Peoples’ reputation for fairness in its dealmaking approach, which gives exiting owners confidence that their employees have a future and won’t be seen as line items that can be cut to create a more profitable acquisition. And that gives Peoples a chance to absorb more companies into its regional network.
To capitalize on this moment, Sibila has devised a growth strategy designed to enable Peoples to not just survive in the changing market, but thrive.
Taking the wheel
Peoples’ approach to acquiring Terminal Warehouse in 2010, the deal that was the first in a series of relatively rapid acquisitions, is considered the foundation for those that followed.
With the Terminal deal on the horizon, the company spent 2009 making adjustments that allowed it to remain profitable during the downturn. It also had a lot of equipment that was fully depreciated, but still had significant market value to leverage. Those factors enabled it to borrow at a time when others had trouble renewing their lines of credit, giving Peoples the chance to take advantage of the bottom of the cycle.
The success of the Terminal Warehouse transaction and paying off that debt gave Sibila additional cash flow to make the next acquisition, pay it off and move on to the next. It’s also the deal that marks the start of the Douglas Sibila era, which is characterized by buying healthy rather than undercapitalized companies with an eye toward maintaining or improving Peoples’ total profit margin.
Acquisitions haven’t always been wholly under Sibila’s control. When he joined the family company in 1990, Sibila spent his first decade as part of the due diligence team. When he became president around 2001, his father moved into the chairman role and began hunting for, rather than executing, deals, handing off opportunities to his son who became a majority shareholder in 2010.
Today, Sibila leads a deal team that consists of a few key management staff, his father, and some outside advisers. Now before an opportunity is presented to that group, it comes through Sibila, who does a lot of the due diligence and prep work upfront.
“We walk away from a lot more than we ever get serious about,” he says.
To find deals, the company looks at trade magazines, networks within trade associations and fields calls from brokers it’s worked with. Sibila believes Peoples gets those calls because the company is reasonable to work with.
“We keep in touch with those people and that’s why we’ve been around for 100 years. I believe in karma in the sense that if you do what’s right, things have a way of falling into place. Because we’ve handled those transactions well, not only are the sellers satisfied with how we approach things, so are the brokers,” he says.
For example, when first presented with an opportunity to acquire Style Crest Logistics in 2014, a lead that came to him from a broker on an earlier deal, he was interested, but wanted to digest an acquisition that the company had recently completed. So he passed.
“I even gave him a reference to a couple other people I knew in the industry,” he says.
About a year later, after other transactions had fallen through, the frustrated seller came back to Peoples to see if there was interest. The timing was right and Peoples closed the deal in September of ’15.
Through its current approach, the company has grown into seven states with 42 locations. It owns Peoples Cartage, Total Distribution, Crown Warehousing & Logistics, Terminal Warehousing, Quick Delivery Service, Central Warehouse Operations and most recently Grimes Logistics Services Inc. (now Grimes Total Distribution) for a total of 7.5 million square feet of warehousing space. Its revenue has doubled since 2012 and more than quadrupled from what it was in 2009.