Company: Logistyx Technologies
Verticals: distribution, manufacturing, retail, third party logistics
Vendors: Cisco, Lifesize, Microsoft, Oracle, Postea, Zebra Technologies
Distributors: Ingram Micro, ScanSource
Any ISV who’s ever been through a merger or acquisition knows how difficult it can be trying to join two company cultures and disparate backend systems, not to mention aligning business goals and determining who stays and who doesn’t. Transportation management execution (TME) ISV Logistyx Technologies’ executive team and capital investment firms created the company by merging three former ISVs — Advanced Distribution Solutions, Inc. (ADSI), Agile Network (Agile) and Pantechnik International.
I recently caught up with Ken Fleming, chief product and marketing officer to get some background on the thinking, strategies and challenges that went into this big move.
There’s three goals an ISV looks at when considering a merger or acquisition: First and foremost, you want to grow your market share, you may also want to acquire new technology, and the third goal is to expand your resources. In our space, we all focused specifically on TME, which is really parcel shipping, warehouse execution systems. We looked at this space and asked ourselves, ‘What opportunities are available?’ What we were astonished to find was that while there were a few instances when a large software company absorbed a small ISV to gain a new technology, no company had tried to do a big merger and dominate the space.
Initially, we were skeptical as to why and considered the possibility that it could be a bad sign as well. In our case, it turned out to be a good sign. There were lots of companies with under $20 million in revenue, and they each tended to focus on niche markets. For example, you would find one ISV, like ADSI, that was good at reaching SMBs in the United States. Pantechnik was well established with international carriers and running systems outside the North American market. And Agile focused on enterprise shipping systems. When this opportunity to merge these three companies was presented to me, my initial thought was this could be the Match.com of technology.
I’ve been involved in M&Is my entire career, and there’s always a lot of overlap that requires deep cuts into one or both companies. In this particular case, the overlap between all three companies was minor. In fact, ADSI and Agile rarely competed for the same deals prior to the merger, and the few times they did, it was a sign that one of them was likely in the wrong place. Plus, they had both partnered with Pantechnik to assist with a customer that had an international presence.
The ecommerce shift is having a big impact on parcel shipping, and the entire market is reacting. Currently, 10% of all merchandise sales are coming from online and that channel is continuing to grow exponentially. Merchants are demanding more choices than ever. Not only do they have to have merchandise on hand for their brick and mortar stores; they need it for their direct online channel as well as for third-party marketplaces like Amazon. Amazon requires that the merchant either ships merchandise to an Amazon warehouse, or the merchant can work with an Amazon Prime certified shipping company like Logistyx Technologies that can print tickets and shipping labels that meet Amazon requirements. This allows the merchant to keep its merchandise in its warehouse and ship directly to the customer.
Highly automated warehouses used by some high-end retailers are another area where we’re now more competitive. Our software works in conjunction with their automation equipment and products can be picked, packed and shipped with no human touching it. We had some of these capabilities before, but now we can serve the entire U.S. along with international destinations, and we have a more complete offering.