Reverse Merger & 3rd Party Logistics Case Study

Topics: Interest, Venture capital, Mergers and acquisitions Pages: 8 (2377 words) Published: April 19, 2011

A small transportation and third party logistics company had recently gone public through a reverse merger. The company was still in a development phase and needed to secure corporate financing. The company also wanted to start an awareness campaign that would build awareness in the financial community and build their profile within the transportation and logistics industry.

Suggest steps to be taken by this company to raise awareness of the company within the financial community, build awareness within the logistics industry, identify funding partner and increase investor awareness.


Upon evaluation, we determined that the company had a promising business model; however they needed to secure financing in order to complete the development of their technology products.

The company also wanted to roll-out an acquisition plan to begin generating revenues through acquisitions quickly; therefore building awareness in the transportation industry became increasingly important.

Finally, the company needed a shareholder communication and investor relations program to manager shareholder expectations during their development phase.

Important terminologies to be discussed:
▪ Third Party Logistics
▪ Reverse Merger
Third Party Logistics(3PL)
A 3PL (third-party logistics) is a provider of outsourced logistics services. Logistic services encompass anything that involves management of the way resources are moved to the areas where they are required. In other words, they provide a one stop shop service to its customers of outsourced (or "third party") logistics services for part, or all of their supply chain management functions. Third party logistics providers typically specialize in integrated operation, warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials. The term “3PL” comes from the military. In business, 3PL has a broad meaning that can be applied to any service contract that involves storing or shipping things. A 3PL service may be a single service such as transportation or warehouse storage or it can be a system-wide bundle of services capable of managing the entire supply chain. The term 3PL was originally coined to differentiate logistic providers who used the Internet to enhance their services from those that did not. As we know now they provide multiple logistics services for use by customers. Preferably, these services are integrated, or "bundled" together, by the provider. Among the services 3PLs provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding. Types of 3PL

▪ freight forwarders
▪ courier companies
▪ other companies integrating & offering subcontracted logistics and transportation services Reverse Merger
A reverse takeover or reverse merger (reverse IPO) is the acquisition by a public firm (typically, only a shell company) of a private firm by transferring over 50 percent of its own stock (thus, handing over its controlling interest) to the private firm. Seen often as an easy way to take a private firm public, it actually jeopardizes the firm's existence because the original owners of the shell will be tempted to cash out (liquidate) their holdings whenever the firm attempts to enhance the market value of its stock (shares).It can also be the acquisition of a public company by a private company so that the private company can bypass the lengthy and complex process of going public. The transaction typically requires reorganization of capitalization of the acquiring company. Reverse merger financial transactions are becoming increasingly popular and accepted. It is an alternative means for private companies to go public. The public shell is a vital aspect of a reverse merger transaction. A public...
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