How to Sell a Trucking and Logistics Company
To sell your business, you need advice from industry experts.
Trucking and logistics businesses are attractive to buyers, but there are operational issues that both the purchaser and the seller must address.
If you’re thinking about selling your business, consider why your business is valuable to a buyer, and if your financial results are trending in a positive direction.
There are several metrics that make your trucking or logistics firm more valuable to a buyer.
6 Industry Advantages
1. Minimizing liability
Your business must accept liability for shipping valuable goods for your customers. If you can minimize accidents and shipping mistakes, you’ll reduce legal costs and retain more customers.
2. Geographic reach
Firms that operate in a larger geographic area have a higher potential for growth. A company that ships items nationwide can serve larger businesses. Local and regional firms don’t have the same growth prospects.
3. Employee retention
Successful companies retain good employees. If your drivers and warehouse workers closely follow workplace safety rules, your firm is more valuable. A purchaser can buy your business and continue operating with your reliable staff.
4. Capital investments
Your trucking or logistics business must invest to maintain a fleet of trucks and other vehicles. Buyers are looking for companies that maintain their trucks, and invest to replace assets when needed. If a firm delays capital expenditures, a buyer will reduce the sale price to account for the required asset purchases.
5. Leveraging technology
Many customers are looking for help with the entire supply chain, and the best firms leverage technology to create more value.
Give your customers technology apps to monitor your firm’s entire logistics process, including transportation, packaging, warehousing, and security. Use technology to report on raw materials and component parts that are en route to the client. Tech tools can also track finished goods that are shipped out to customers.
If you provide user-friendly tools to monitor the logistics process, your customers will have more confidence in your firm,
Each of these factors increases your company’s value from the buyer’s perspective. A business broker will use a number of variables to value your business.
6. Brand Awareness, Recurring Revenue
Buyers want firms with competitive differentiation and uniqueness in the market. If customers know your brand, and perceive your brand to be unique, your business is more valuable.
In the trucking and logistics industry, customers want firms that are reliable, safe, and deliver products on time.
Companies that develop a profitable niche build brand awareness by targeting a smaller market. If your firm specializes in the automotive parts industry, for example, you can focus your marketing efforts to become the dominant company in the niche.
Purchasers also value recurring revenue, which you can develop with repeat customers. Recurring revenue allows you to increase sales while you control your marketing costs.
Your business broker will use metrics and online valuation tools to determine the business price. They analyze the sales of similar companies, industry trends, and market factors.
Here are some common measurements used for business valuations:
Factors That Impact Valuation
The ability to generate consistent profits and cash flows is a critically important valuation tool.
Business profitability is often measured using earnings before interest, taxes, depreciation, and amortization (EBITDA). Companies in your industry may be valued based on a multiple of EBITDA factors.
Your firm’s ability to generate cash flows is also important, because business profit does not immediately produce cash inflows. Firms are also valued based on a multiple of cash flows.
The overall direction of your finances is another valuation factor.
A broker will consider trends in your income statement and balance sheet. Purchasers value firms that can increase sales and control costs over time. If you’ve reduced long-term debt and increased equity in recent years, your firm is more valuable. It’s also important to maintain a strong credit history, so a buyer can finance business purchases down the road.
The valuation process is one component of the sale process. Your business broker will guide you through a number of steps to sell the business.
The Business Sale Process
A broker works as your trusted advisor during the entire sales process.
Your broker will create marketing materials to promote your business, and will then market your firm to potential buyers. Raincatcher, for example, works with a curated list of several hundred thousand entrepreneurs and buyers from all over the world.
The broker will evaluate interested buyers and determine if they have sufficient resources to finance the purchase.
If a potential buyer wants to move forward, they will sign non-disclosure documents and start the due diligence process. A due diligence review includes financial statements, and contracts with vendors, customers, and your employees.
The broker will manage the review of documents, and keep the due diligence process on track. Brokers work with your banker, attorney, and your accountant to address each aspect of a business sale.
Finalizing the sale
Finally, your broker will negotiate the final price, and determine how and when the sales proceeds will be paid. The broker, along with your attorney, will ensure that all required documents are signed at closing, and address business transition issues.
Find an Industry Expert
Selling a trucking or logistics company can present some unique challenges.
Work with an experienced broker, so that you can keep the sales process on track and finalize an attractive sale price. The experts at Raincatcher can find qualified buyers for your business, and help you navigate the entire sales process. Work with Raincatcher, and sell your business with confidence.
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