Logistics, PosiGen transactions top October M&A activity

By: G.F. Gay Le Breton and Alexander Aguilar November 15, 2022
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Where there is a problem, there is an opportunity. Global supply chains ran into significant troubles during the COVID-19 pandemic, leading to higher freight rates, record profits and increased M&A activity to obtain resources, such as technology to optimize operations.

Indiana-based Grammer Logistics saw opportunity last month when it purchased Logistic Management Resources, a Baton Rouge transportation logistics company with expertise in the chemical industry. LMR has provided third-party logistics services since 1981. The company developed a robust transportation management system platform to provide management solutions to its clients across all modes of transportation, including tendering, safety compliance, technical support, transloading and more.

Grammer, which is owned by two private equity firms, Stellex Capital Management and Great Mill Rock LLC, is a hauler of chemical and industrial gasses. Its CEO, Scott Dobak, said the acquisition “supports our strategy of providing a diversified offering of both asset and non-asset services to our growing customer base.” LMR’s president and CEO Heston Hodges will lead Grammer’s transportation management division.

Private equity firms have backed many deals in the logistics sector. In fact, in 2021, private equity was involved in around one-third of the transactions. Today, however, supply chain complications are being resolved, leading towards normalized profits. Investors are uncertain in a global economic downturn. Both issues point towards lower demand for logistics companies in the M&A markets. First-time private equity investors are turning away from entering the industry, unable to borrow enough cash to meet valuation expectations. As a result, companies with current operations in the industry, including those backed by PE, are the primary hunters for deals.

The LMR acquisition is the latest event in Grammer’s pursuit to grow. Patrick Maher, Grammer’s chief commercial officer, said the company is not done expanding with the help of its private-equity partners, who acquired Grammer in 2018.

In another Baton Rouge logistics industry deal last month, tank barge operator General Marine Services sold to Tuscaloosa-based barging company Parker Towing Company. Founded in 2015, GMS operates a fleet of liquid tank barges and towboats, primarily serving the oil, gas and petrochemical industries.

Parker Towing said the move is geared toward diversifying and growing from a traditionally dry cargo carrier, and expands its current barge division. Parker transports commodities including coal, steel, aggregates, forest products, grain, cement, asphalt and other petroleum products.  Parker is one of the largest family-owned barge lines in the U.S., operating a fleet of towboats, 390 open and covered hopper barges, as well as a fleet of 30,000 BBL tank barges.

In other M&A news last month, Louisiana startup PosiGen Solar acquired New England Conservation Services, Connecticut’s oldest home energy solutions provider. This is PosiGen’s first energy efficiency acquisition, setting the groundwork for PosiGen to bring energy efficiency services in-house across markets.

“The energy efficiency side of what we do here at PosiGen cannot be understated,” said Tom Neyhart, CEO.  “It’s the combination of our solar energy systems, plus the energy efficiency upgrades that we perform, that allows us to deliver greater savings to our customers.”

New Orleans-based PosiGen is a leading provider of renewable energy and efficiency solutions for low-to-middle income households. In January 2022, the company raised $100 million in preferred equity to scale PosiGen’s operations outside of Louisiana. The round was led by Magnetar Capital and included existing investors Emerson Collective, Irradiant partner, Activate Capital, The Builders Fund, SJF Ventures and The Kresge Foundation.

Co-founded in 2011 by Tom Neyhart, PosiGen started raising outside capital six years ago and had previously generated nearly $200 million.

G.F. Gay Le Breton is managing director for Chaffe & Associates Inc., responsible for the merger and acquisition activities of the firm. Alexander Aguilar is a financial analyst with the firm.