U.S. Delivery Systems, Inc.
U.S. Delivery Systems, Inc.
Wholly Owned Subsidiary of Corporate Express, Inc.
Sales: $346 million (1995)
SJCs: 4215 Courier Services Except By Air; 4212 Local Trucking Without Storage; 7381 Detective & Armored Car Services
An integral part of the fastest-growing office-supplies company in the United States, U.S. Delivery Systems, Inc. serves as the delivery backbone for its parent Corporate Express, Inc., operating a fleet of 7,500 delivery vehicles throughout the country. U.S. Delivery was founded in 1993 as a combination of six same-day, local delivery service companies. A spate of acquisitions followed—all same-day local delivery service companies—as the company rapidly developed into the largest national company capable of providing local delivery service. In 1996, the company merged with Corporate Express, which operated in more than 190 locations in the United States, Canada, the United Kingdom, and Australia.
U.S. Delivery made its debut in the business world in 1993, and shortly thereafter drew the attention of industry observers. Their interest was piqued for several reasons. The company was recording explosive financial growth, its geographic reach was rapidly enveloping the country, and, perhaps most intriguing, it was attempting to do what no other company in the courier industry had ever accomplished. At the time, the courier industry was a $15 billion-a-year-business and highly fragmented, comprising roughly 10,000 small companies who provided same-day, local delivery services. U.S. Delivery, in its push to become an industry pioneer, was intent on entirely changing the face of its industry. U.S. Delivery was attempting to take all the best-run companies of the industry’s 10,000 competitors, merge them together, and create the first national company to provide same-day, local delivery service. It was a lofty ambition, one that required a careful study of key acquisition candidates, the financial wherewithal to wage an extensive acquisition campaign, and the savvy to meld the disparate collection of individual courier companies into one coherent and efficient whole. It was a concept envisioned by the individual behind U.S. Delivery, Clayton K. Trier, who proved to be aptly suited to the task before him.
Trier’s greatest skill was in the corporate art of identifying, negotiating, and completing acquisitions. His professional career before he took the helm at U.S. Delivery had demonstrated such. An accountant by training and a former Arthur Andersen partner, Trier earned his reputation during the late 1980s while serving as the chief financial officer of Allwaste, Inc., an industrial waste cleaning company operating in a highly fragmented industry. Trier was one of the chief reasons Allwaste recorded phenomenal growth between 1987 and 1990. The waste cleanup industry was going through a major consolidation phase, and during a three-year period Trier orchestrated the purchase of at least 49 waste service firms. “He [Trier] helped identify many of the opportunities we took advantage of,” remembered an Allwaste senior executive, “and he was instrumental in negotiating and finalizing the acquisitions we were involved in.” Despite Trier’s decisive contributions to Allwaste’s growth, the company’s meteoric rise was followed by an equally demonstrative downward spiral. By 1990, after the hazards of asbestos removal were publicized, Allwaste’s stock value (which was used to finance the numerous acquisitions spearheaded by Trier) dropped significantly and the company never fully recovered. Trier resigned in 1990, vacating his post as president to start his own company, Trier & Partners Inc., a consulting firm for a wide range of environmental companies.
Trier would use the same acquisitive skill honed at Allwaste to build U.S. Delivery into a national mainstay. But before the mammoth chore of shaping myriad separate pieces into a seamless whole could begin, the intervention of one of Trier’s long-time business associates was required, because the idea of creating U.S. Delivery was not Trier’s. Credit for that inspiration fell to Trier’s friend, Mike Baker, a former associate counsel for Browning-Ferris Industries who called Trier in 1993 and discussed the possibility of uniting six local delivery companies in Texas, California, and New York. According to Trier, his first reaction was, “You mean those spiky-haired guys on bicycles,” but as he thought further the idea sounded right for the times and suited to his talents. By 1993, economically recessive conditions had prompted corporate America to make wholesale changes, and two of those changes, as Trier saw it 1993, provided lucrative opportunities for something the American business world had yet to see: a national company able to deliver same-day, local delivery service. Companies throughout the country were reducing the financial burdens stemming from carrying large inventories by switching to “just-in-time” delivery of materials and components: a boon for delivery companies. Further, the emphasis on reducing costs wherever possible had led businesses to eliminate many in-house departments, including courier service, creating a pressing need for a company able to compensate for all the delivery activities formerly done by company employees. Add to the equation that the courier industry was highly fragmented and would require someone well versed in the procedures of acquiring one small company after another, and Trier was hooked. Before the end of the year in 1993, U.S. Delivery was formed, with Trier holding sway as the company’s president, chief executive officer, and chairman.
When Baker called Trier about the possibility of joining six local delivery companies together, his suggestion was not a hollow thought, barren of any financial might. Baker, since his days at Browning-Ferris Industries, had gone on to found his own venture capital firm, Utah-based Notre Capital Ventures, which staked Trier $300,000 and promised to cover $2 million in start-up expenses to get the fledgling U.S. Delivery up and running. Neither Baker nor Trier were aspiring entrepreneurs plotting their actions in the corner of a household kitchen. Their plan was big business, requiring vast sums of cash. With no time to waste, the particulars of creating a national, yet locally-oriented delivery company were brought together. A group of investors were brought into the fold, including the owners of two local delivery companies that Trier and Baker had targeted as U.S. Delivery’s initial acquisition candidates. First on the acquisition list were two delivery companies based in Houston, where U.S. Delivery established its headquarters. They were Eastway Delivery Services of Houston Inc., which had operations in eastern Texas and Louisiana, and ViaNet Inc., which served Texas, Louisiana, and Tennessee. The other four companies of the six original companies were two Northeast firms, First National Courier Systems Inc. and Grace Courier Service Inc., and two West and Midwest companies, U.S. Courier Corporation of San Francisco and U.S. Service Corporation of America. In addition to these six delivery companies, Trier was also in pursuit of Maryland-based CallCenter Services Inc. to provide inbound telemarketing services for retail distribution. These were the initial building blocks of a company that was expected to cover as much of the nation as possible.
With the six delivery companies supported by the national telemarketing company, Trier hoped to serve at least 22 markets at first, including eight of the 10 largest metropolitan areas in the country. As 1993 turned to 1994, however, all Trier had was hope. Until the spring of 1994, U.S. Delivery had few existing assets, no operations, and, except on paper and in the minds of a handful of individuals, did not exist. The magical force that would bring life to the company was an initial public offering (IPO) of stock, the completion of which was a prerequisite for the consummation of the contracts to purchase the seven companies that would compose the core of U.S. Delivery. Everything hinged on the IPO, and as the spring of 1994 drew to a close Trier and cohorts pinned their hopes on the appealing concept of a nationally-operated local delivery service to the investing public.
1994 Public Offering Ignites Expansion
In March 1994, Trier filed with the Securities and Exchange Commission for permission to sell 40 percent of the company to the public, hoping to garner between $36 million and $48 million from the IPO. When U.S. Delivery’s stock debuted on the New York Stock Exchange in May, the company raised $30 million, slightly less than Trier’s publicly revealed estimates but enough to make U.S. Delivery a reality. Once this major hurdle was cleared, the push was on to weave the fabric of a locally-oriented delivery company that could blanket the country. There were still 9,994 small courier companies available for the taking.
Once out from the starting block, Trier never looked back and never seemed to stop and gloat over what he had. U.S. Delivery went on a buying spree, purchasing the best companies in their respective cities across the nation. Sales by the end of 1994 hit $156 million, profits registered $6.5 million, providing a yardstick for future growth. By early 1995, the company maintained offices in 34 U.S. markets, and Trier was ready to make the impact of U.S. Delivery on the courier industry more profound.
In February 1995, Trier acquired Michigan-based American Distribution System Inc., a company involved in logistics management—the coordination of transportation, distribution, and warehousing of products—for industrial, commercial, and retail clients on a national basis. The acquisition was regarded as a significant step toward U.S. Delivery’s pursuit of developing into a national local-delivery staple, giving it a thread of administrative support to connect its growing legions of local delivery companies. American Distribution also had contracts with a network of 250 same-day, local delivery companies, providing Trier with a ready-made list of potential acquisition candidates. Trier was ecstatic about the acquisition, saying, “I’ve never seen anything that fits as well together as U.S. Delivery’s local delivery business and the contract logistics management business.” Trier continued, “We’re going to be able to increase our local revenues by taking advantage of the additional volumes of freight that American Distribution controls for its customers. And U.S. Delivery will increase American Distribution’s revenue base by introducing them to our national account customers.”
The acquisition spree did not slow before the purchase of American Distribution, nor did it slacken afterwards. During the month preceding the addition of American Distribution, U.S. Delivery had acquired five more local delivery companies, and in the months following the acquisition Trier continued to bolster the company’s prowess, selecting what he determined were the best companies in each city he pinpointed. By the end of the summer in 1995, U.S. Delivery had acquired 33 small delivery companies since its IPO, with nine more purchases pending. All told, U.S. Delivery served 85 cities by the fall of 1995. “We’re blanketing the map,” Trier noted with confidence, as he announced plans to add 30 more markets to U.S. Delivery’s fold by 1997. As Trier had anticipated, U.S. Delivery was generating the bulk of its business from corporations that were outsourcing their distribution and delivery services. As a result, U.S. Delivery was winning the national accounts of massive conglomerates such as Exxon, which preferred to deal with one delivery operator rather than a swarm of small, local companies.
As U.S. Delivery was competing in the mid-1990s, it was the first and the largest public company in the same-day local delivery business, and was taking every measure to retain its distinction as the latter. Six more local delivery companies were purchased in September and October 1995, extending the geographic scope of the company’s fleet of vans and trucks. The consistent influx of new businesses had been pushing sales upward since the IPO, and as 1995 drew to a close, sales for the year exceeded $340 million. Not surprisingly, Trier was pushing for further growth, vowing to add between $100 million and $150 million to the company’s revenue volume by the end of 1996. Before that target date arrived, however, U.S. Delivery would be in a dramatically different position. By the end of 1995, Trier was involved in negotiations that would alter significantly U.S. Delivery’s future.
1995 Merger with Corporate Express
The deal that made 1996 a year of great change for U.S. Delivery began next to a swimming pool in Palm Springs, California. Gathered together in Palm Springs were the nation’s leading entrepreneurs, each a candidate for Inc. magazine’s annual award bestowed to the nation’s top entrepreneur. Trier was there and so was Jirka Rysavy, founder and chief executive of Corporate Express, Inc. The two businessmen had several things in common: Both were respected and successful entrepreneurs, Trier was 43 years old, Rysavy was 41, and both had attained stardom in the entrepreneurial field in much the same way. Rysavy had founded Corporate Express in 1986 by purchasing an unprofitable office-supply store in downtown Boulder, Colorado. He spent the ensuing decade acquiring as many small office-supply stores as possible, quickly securing a sizeable presence in a highly fragmented industry. The similarities were there, and each man recognized them. Further, their businesses had an obvious synergistic relationship—one was a delivery service and the other sold office-supply merchandise, which needed to be delivered. Given these shared characteristics, it was not surprising that as the two entrepreneurs lounged by the pool in Palm Springs their conversation turned to the topic of merging their companies.
Two months later, the deal was announced. The two companies jointly revealed they had executed a definitive agreement to merge that would create a corporate office-supply enterprise with a fleet of 7,500 vans and trucks and more than $1.6 billion in revenues. Trier was excited about the deal and what it meant for the future of U.S. Delivery. “Our management team is highly enthusiastic about this strategic alliance,” he told reporters. “We believe that the pairing of Corporate Express’ information technology systems and marketing experience with U.S. Delivery’s understanding of the transportation and distribution needs of large commercial enterprises will create an organization capable of providing a unique mix of services both domestically and internationally. We believe joining forces with Corporate Express will allow us to grow at an accelerated pace, both internally and through acquisitions.”
In March 1996 the merger agreement was ratified by the shareholders of both companies, wedding together the nation’s fastest-growing retailer of office supplies with the fastest-growing provider of same-day local delivery service. Under the terms of the agreement, Trier was given the responsibility of running U.S. Delivery as a subsidiary of Corporate Express. With both companies working together toward a common goal, Trier and Rysavy charted their course for the late 1990s, intent on creating a national force without rival.
“Corporate Express Agrees to Buy U.S. Delivery,” Wall Street Journal, January 8, 1996, p. 3.
Ketelsen, James, “Learning the Hard Way,” Forbes, December 18, 1995, p. 130.
Lewis, Jerry W., “Corporate Express: From $100 to $3 Billion Market Value,” Boulder County Business Report, June 1996, p. 1.
Pybus, Kenneth, “Allwaste Ex-President Goes Public with Nationwide Delivery Network: U.S. Delivery Seeking $48 Million to Buy 7 Businesses,” Houston Business Journal, April 11, 1994, p. 1.
_____, “U.S. Delivery Breaks New Ground in Purchasing Michigan Company,” Houston Business Journal, February 24, 1995, p. 2.
Schonfeld, Erick, “Delivering Growth,” Fortune, September 4, 1995, p. 137.
—Jeffrey L. Covell