Selling a Trucking Company

trucking company

Selling a trucking company is much more complicated than selling a regular business, in no small part because it often indicates you are ready to retire or move into another venture.

Before you sell, you need to be sure that action will support your next move – and a transportation business broker can help make sure you’ve made the right decision.

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Selling a trucking company

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Promise of Confidentiality

As a transportation business broker specializing in the sale of trucking, transportation, and logistics companies, one of the questions most often asked by potential clients is how my brokerage firm can maintain confidentiality while selling a business and what security procedures we have in place to protect our clients.

Highest Selling Value

With an incredible number of trucking, transportation, and logistics companies exiting business ownership for retirement, it’s imperative that sellers make their businesses stand out from others on the market. In this article, we’ll discuss how to get the best price for your transportation and trucking company.

Am I Ready to Sell?

What is your motivation for selling? Selling a trucking company requires significant time, effort, and emotional commitment. Ask yourself, “Am I positive I want to sell, or am I just thinking about the idea?” Does your spouse support selling now?

Do I Need to Pay Tax on the Sale?

A Structured Sale enables the seller to defer up to 100% of sale year taxes. Taxes can be deferred for a few months up to several years. A Structured Sale can give the Seller or the owner of the trucking and transportation business a lot of flexibility in managing tax payment options,

Questions?

If you have questions or would like more information about a specific trucking, transportation, or logistics sector, call us today at (916) 570-2674 or click the link below to get started.

Are You Selling a Trucking Company?

Selling a trucking company can be a long and complicated process. Even with a good exit strategy in place, you will face many hurdles, lots of paperwork, and potential setbacks.

Here are 10 steps to help you learn more about how to sell a trucking company and how to make your transportation & logistics business more appealing than others on the market.

 

Preparing to Sell a Transportation & Trucking Company

 

1. Think Like a Buyer

When preparing a transportation & logistics business for sale, you need to start by thinking like a buyer.

You know your company is great, but how would an outsider see it? Imagine you’re buying a company and trying to do your due diligence. What would you look for? What might be a red flag?

If you can get in this mindset, you can rectify factors that may turn off strategic buyers and prevent any setbacks.

2. Paperwork

One of the first things a strategic buyer will want to see is your documents. It can take a while to get these in order, so it’s best to start gathering and organizing long before you put your business on the market.

Some of the paperwork you will need includes:

  • Tax returns and financial statements from at least the past three years
  • Different markets you serve in your business and the portions of your income that come from each market
  • A list of your ten highest volume customers and the amount you make from each
  • A list of aging accounts receivable and payable
  • A list of all the equipment in your facility, with year, make, model and serial number, and other details on each
  • An inventory list
  • Detailed information about employees (you won’t distribute this information during the initial stages of selling)

 

This list is by no means exhaustive. You’ll need to prepare much more before putting your business on the market. Once you find potential buyers, they may have requests for other types of documentation as well.

3. Are your employees dependent on you?

Many California business owners have trouble delegating tasks and wind up doing much of the work themselves. While no one knows your company the way you do, it’s important to make sure your staff can carry on with the majority of your business’s functions when you’re not there.

Here are some key tips on selling your logistics and transportation business.

If you are the only one who knows how to do a large part of the business, you may turn off buyers. Most trucking business buyers want a turnkey business, not an investment where they will have to spend hours training employees or taking over the bulk of the work. As an added benefit, by training your employees, you are ensuring that the business can function as you transition out.

4. Processes

Many trucking company owners have a system of running their business that is entirely in their heads. You know the ins and outs of your business and you are the one who keeps everything running. While this may work as long as you are with the company, a potential buyer will want to know what processes are in place.

Therefore, you need to create an operations manual for each of your processes. Work with your employees to develop this manual by getting everyone to detail exactly what they do. Potential buyers will be impressed with a company that’s ready to go as soon as the change of ownership happens, and your purchase price potential will be greater. As a bonus, if your employees are trained to do what you do, your business will carry on just fine, even if you have to be out for an extended period or if an employee leaves your company.

5. Get Everything Ready

If you have neglected cleaning and organizing your facility, it’s time to get it in order. Go over everything, from fleet to inventory to paperwork. Get rid of anything you do not need and clean up everything else. Paperwork should be organized, and the operation’s facility should be clean. It may not be possible to get everything perfectly orderly, but make your best attempt (or hire someone to).

6. Check the Law

If your California transportation and trucking business isn’t following local and federal laws, most buyers will turn away immediately. Read up on the laws and go through every step of your process to ensure you are in compliance. Also, make sure that all relevant employees understand the law.

7. Accurate Records

Go through your records and make sure that everything is up to date and completely accurate. A buyer will certainly do their due diligence, and if it looks like you’re not completely truthful, they’ll head elsewhere.

Go through your records of profits and losses and make sure they line up with what’s stated on your tax return. If your records and tax returns do not match, do not try to fix this issue yourself. You will need a CPA to reconcile the two, and you will also need a reasonable explanation for why there was an incongruence in the first place.

8. Financial Obligations

A buyer does not want to have a company that has a multitude of unresolved financial transactions. Make sure everything is current when it comes to money because no buyer wants to take on a business with a lot of pre-existing obligations.

Simply put, if you have any accounts you have not paid, take care of them as quickly as possible. If clients owe you, work to get their accounts current. If you owe anything in taxes, make sure to pay. Also, check to see if your business has any liens in place. Your finances should be clear and ready to go when you hand over your business.

9. CPA

Once you’ve gathered and organized all of your financial documents, it’s necessary to review everything with your CPA. Your CPA can look over everything, make sure you’re current and tax-compliant, and advise you on any errors.

A CPA can also help you create records that show the true potential of your transportation and logistics business. In most cases, the tax records of your business are set up to prevent paying a lot back in taxes. However, once it is time to put your trucking business up for sale, you will want records to show your business’s potential for profits. It is important to let a CPA restructure these records instead of doing it yourself.

Additionally, you need to consider the taxes you will pay after the sale. A CPA can help you go over the terms and help you figure out how much profit you will have left after paying taxes. It is especially important to see how much you will actually get if you are retiring, as you’ll want to ensure you have enough to maintain your current quality of life.

10. Hire a Transportation Business Broker

The steps to creating an exit strategy and selling your trucking business are arduous and complicated. It can take you many hours to get everything in order. If you are still working full-time running your trucking company, you simply may not have the time to do both.

If this situation applies to you, you may want to hire a California-certified broker. A broker knows exactly what to get your California trucking company for sale. They can guide you through each step of the process, help you avoid any errors, make your business more attractive to buyers, and ultimately help you get a better price.

Types of Transportation & Logistics Businesses

There are many California logistics and transportation businesses for sale.

Before you can advertise your trucking business for sale, you need to figure out the correct NAICS code for it. These codes describe your business activities and will help potential buyers understand what kind of business you’re selling. Using the right NAICS code is important because it can help buyers search for listings and find the right transport company for sale based on its activities.

The NAICS 48-49 category covers a wide range of activities related to transportation and logistics. You can find more specific three to six-digit codes for things like air, rail, water, or truck transportation. There are codes for activities that support these different types of transportation and codes for activities like delivery, warehousing, and storage.

Below is a comprehensive list of transportation & logistics companies:

1. Freight Forwarding

A freight forwarder is a firm specializing in the arrangement of cargo on behalf of shippers. In most cases, freight forwarders provide a variety of transportation, logistics, storage, and trucking services, including Ocean or air freight transportation. Inland transportation from the origin and/or to the destination.

2. Limo Business

Limo businesses provide transportation services to the public, offering convenience and luxury.

3. Trucking Companies

The Trucking & Logistics Industry is a cyclical sector comprised of companies that provide shipping and transportation services, using tractor-trailers, to customers, which are usually commercial businesses. Most trucking outfits own and operate the vehicles in their fleets, though some do rely on leasing.

4. Medical Transportation Business

Medical transportation companies offer a much-needed service for people who are unable to drive themselves to medical appointments or healthcare facilities. Nonemergency medical transportation (NEMT) is transportation by ambulance, wheelchair van, or litter van for those who cannot use public or private transportation. Nonmedical transportation (NMT) is transportation by private or public vehicle for people who do not have another way to get to their appointment.

5. LTL Trucking 

LTL (Less than truckload) shipping aims to maximize the space available on a given truck. It is done by sharing cargo space with other deliveries and just paying for your partial load. What could this mean for you? LTL trucking could lower costs, improve your efficiency, and even help reduce our carbon footprint. A  LTL trucking company may consider hiring a transportation business broker to help successfully sell a trucking business.

6. Overnight Delivery 

A delivery service, sometimes referred to as next-day delivery, takes place overnight. Parcels are collected during a business day and travel to the destination city during the night with delivery taking place the following day. Rogerson Business Services provide great help in valuing and selling your overnight courier company in California.

7. Airport Services

Services include transit handling, ancillary operations, ramp and cargo systems, passenger reception services, and off-site airport operation transportation and logistics activities. An undertaking providing airport services such as aircraft ground handling, fueling, maintenance, and security, passenger services such as check-in, baggage handling, and other services. Considering selling your California airport services business? Reach out to Rogerson Business Services to help you value and sell your transportation business successfully.

8. Marine Services

Fleet management – when you manage a small fleet, things are easy to keep track of. Two or three vessels and their crews are no big deal. But as your business grows, and three vessels turn into 12 with routes and schedules around the world, it becomes difficult to pin down the details at any given moment. Fleet management is only one of the many services that make sense for a growing company. From the daily logistics to maintenance schedules, our experts are well-positioned to manage your growing fleet. Are you thinking of selling your transportation and logistics company? We can help by getting you started with an exit plan. 

9. Junk or Freight Hauling 

A standard trash can or regular trash pickup service will simply dump your junk into nearby landfills and walk away. Junk haulers help reduce the number of recyclable items that end up in landfills by ensuring materials get disposed of in an environmentally safe way. Junk Hauling simply refers to the process of picking up and hauling away unwanted junk from your home or business. 

Freight hauling is the process of moving goods from point A to point B using a fleet or trucks or any other type of land, sea, or air transportation method.

10. Waste Management

Waste management is the collection, transport, processing, recycling, or disposal and monitoring of waste materials. Effective waste management services can save your business money and benefit the environment at the same time.

11. Towing

A tow truck business transports these vehicles to repair shops, impound lots, and other locations as directed. Some tow truck businesses also offer emergency roadside assistance. Learn how to start an exit plan to transition your own towing company and whether it is the right fit for you. Get started by contacting Andrew Rogerson, Certified Business Broker, serving the state of California.

12. Logistics

 The overall process of managing how resources are acquired, stored and transported to their final destination. Transportation and logistics are now used widely in the business sector, particularly by companies in the manufacturing and wholesale distribution sectors, to refer to how resources are handled and moved along the supply chain. Are you ready to sell your logistics company in California? Get started.

Couriers can arrange to make precise pickups or deliveries to a specific individual, room, or department. Local Shipping — Businesses may need speedy delivery of important documents within a city. A courier business owner who says, “I want to sell my business” might approach a business intermediary – even if they are considering a transition plan.

Each of the above represents a niche within the market. For example, putting a trucking business for sale may look different than selling a distribution company. A transportation and logistics business for sale will look a lot different than a manufacturing business for sale. 

Again – knowing where your business falls in among these categories can help you coordinate your buying and selling checklist, along with knowing the transportation and logistics market size. 

What is the Role of a Certified Transportation Brokers in Selling My Trucking Business?

You may be wondering how business brokers can help you with selling your trucking and logistics business. What is their role and what are you required to do? Below, we’ve detailed some of the top services your broker should provide.

Qualifying Buyers

Buyer analysis is one of the duties your transportation business broker will perform. Logistics industry growth opportunities attract a wide range of buyers, but not all of them are going to be a good match for your company.

You will start getting offers from potential buyers once you advertise your cargo shipping business for sale and starting the due diligence process with a buyer who doesn’t have access to financing or who isn’t serious will result in a waste of time. You could miss out on an offer from a serious buyer if you don’t vet buyers properly.

The business intermediary you work with will start this process by qualifying potential buyers and reaching out to them to advertise the offer.

Potential buyers can be competitors, employees, investors, Private Equity Groups, family offices, corporate investors, and other entities.

Competitors make for an interesting pool of buyers. There is a strong potential for growth through buying a company. Businesses can expand the range of services they offer through buying or acquiring a company and spend fewer resources on competing to strategically buy the competition. 

It’s important to exercise caution when dealing with competitors. The documents needed to sell a business include financial statements, agreements, and other documents that will give your competitors access to the ins and outs of how your business operates. If the deal falls through, you could end up with a competitor who knows too much about your business. A broker can identify serious buyers so that you don’t reveal too much information to a competitor.

Main street business intermediaries can also identify corporate, strategic, and synergistic buyers. These buyers have a plan to achieve growth through acquisitions. These companies might not be buyers that you would consider, but a broker can identify these buyers and analyze whether your shipping container business for sale is a good match for their M&A strategy.

Acquisition-Oriented Businesses

Main street California businesses for sale can attract acquisition-oriented buyers. It’s a type of deal a Broker can help you set up, and you might find that your business is worth more to a buyer who has a specific acquisition strategy in mind.

Acquisition-oriented businesses pursue strategic growth as their primary goal. They might look for main street business opportunities to grow an existing business or purchase your freight business for sale to leverage existing processes.

Here are some of the strategies these buyers might pursue:

  • Some buyers will consider buying a trucking business so they can invest in it and improve its performance and profitability. Strategic buyers will often look for businesses with low-performance numbers or organizations that are undervalued to get the best return possible on their investment.
  • Acquisition-oriented businesses sometimes use consolidation strategies. When the offer is greater than the demand for a service, competition can become difficult. It often makes more sense to consolidate competing businesses into one entity that offers a single service.
  • Market access is another strategy buyers might use. If your company has the capacity to offer a service but doesn’t have access to the right market because of its location or small size, getting access to a bigger platform through an M&A deal can facilitate market access through its existing customer base or location.
  • Some buyers are after skills, technology, IP, and other assets. A buyer might not be interested in operating the company they buy. They might want to make the purchase because the business holds assets that would add value to the existing company, including a skilled workforce, patents, or equipment.
  • Transportation business opportunities can attract strategic buyers because of scalability. A company that uses a transport and logistic service can scale up its operations and reduce costs by buying a truck company instead of outsourcing delivery.
  • The freight and logistics M&A landscape 2021 revealed opportunities for growth in this sector, even when other industries struggled because of the pandemic. This strong potential for sustainable growth is attracting buyers who are looking for transformational mergers. These mergers allow a business that is struggling to enter a new market and offer new products or services by using an existing platform.

A transportation business broker can analyze your business and find areas that would create value for strategic and synergetic buyers. They can reach out to these buyers and highlight the processes and assets that would be a good match for the acquisition strategies of corporate or strategic buyers they have identified.

What Does an Advisor Manage During a Business Sale?

A broker will assist you with the following phases and activities.

Exit Plan

An Intermediary will help you establish a business exit strategy. This exit plan will outline the best path to take to sell the business and will include strategies and marketing activities for listing and promoting the offer.

The exit plan will also identify the most relevant business valuation method and include a list of potential buyers, along with steps the broker will take to vet these buyers.

Deal Origination

Your business advisor will put together an outreach program to contact vetted buyers and get them interested in your trucking business for sale in California. They will pitch buyers and generate leads by focusing on the unique value your operation represents based on where each buyer stands.

Besides engaging in social selling, your intermediary can create and distribute information to advertise the business for sale and reach out to a wider range of buyers.

As offers start coming in, your Advisor will analyze and evaluate them. They will provide advice to help you select the best offer for your personal goals and the future of the freight brokerage company for sale.

Negotiation and Buyer Due Diligence

Your broker will help with the negotiation process. They will assist with the creation of a Letter Of Intent that works as a non-binding agreement between the parties to establish a timeline and some general terms for the deal.

Anyone interested in buying a transportation company will have an M&A financial due diligence checklist. Your broker will help the buyer perform their due diligence process while maintaining confidentiality.

Here are some of the documents they will provide the buyer with:

  • Income statements
  • Records of accounts receivable and payable
  • Balance sheets
  • Tax returns
  • Business activity statements for the past three to five years
  • Profit and loss records for the past two to three years
  • Cash deposit and payment records
  • Utility accounts
  • Statements for banks lines and loans of credit
  • Meeting minutes
  • Audit work paper files if applicable
  • Your written claims about the business and why you’re selling it
  • Privacy agreements
  • Compliance-related paper trail
  • Inventory records
  • Any paperwork related to equipment, fixtures, and vehicles
  • Records of intellectual assets, including IP, trademarks, and patents
  • Contract with employees, vendors, and clients
  • Partnership agreements
  • Leases
  • Details of your automated financial systems
  • Credit history
  • Business valuation information

Avoiding Common Warning Signs

When scouting logistics companies for sale, buyers are going to have a list of warning signs to watch out for. A broker can help you provide everything the buyer needs for their due diligence process without raising any of these common red flags:

  • You refuse to share important information or who won’t give a valid reason for wanting to sell the business.
  • You won’t agree to a trial period during which the buyer can complete their due diligence process. It’s common to agree to a trial period of at least 30 days.
  • You’re reluctant to let the buyer meet suppliers, partners, and other key people.
  • You want to move too fast and close the deal as quickly as possible.
  • There are legal proceedings you didn’t disclose.
  • There are issues or inconsistencies with your credit history.

Negotiating the Definitive Purchase Agreement


Offering middle-market businesses for sale involves several steps. The broker
 works closely with you and your legal advisor, especially while negotiating and finalizing the Definitive Purchase Agreement. This Definitive Purchase Agreement helps both parties reach their goals for the transaction and allows no room for error as it completely represents the legal wishes of each party. 


A good 
M&A Definitive Agreement is the lynchpin of a good transaction. Both seller and buyer exchange a large amount of information from different sources.  This is often over many months of conversations.  These exchanges are then condensed, with their individual interests, as best as possible into the Purchase Agreement. 

Items a typical Definitive Purchase Agreement may include:

  1. Treatment of Shares, Options, and any other Securities; if appropriate to the transaction
  2. Representations and Warranties
  3. Covenants
  4. Solicitation (“No Shop” clause)
  5. Financing
  6. Termination Fee (or “Break-Up Fee”)
  7. Indemnification
  8. Material Adverse Change (MAC) and Material Adverse Effect (MAE) Clauses
  9. Closing Conditions

The Definitive Purchase Agreement can have potential pitfalls, so your business broker needs to keep the communication open with the buyer and their deal team as well as the seller and their deal team.

The M&A Definitive Purchase Agreement also needs to include details about tax obligations and consequences, especially if shareholders are involved.

Avoiding Pitfalls if you have a Buy-Sell Agreement


What if the seller is two or more individuals?

Many businesses have multiple owners or shareholders. Getting an agreement from a majority of the shareholders about selling the business and being willing to accept an offer can be challenging. One of the shareholders may not have any interest in selling the business at all or may want something specific most buyers will not be willing to agree. If this is the case, hopefully, there is a Buy-Sell Agreement in place as this will outline what each shareholder needs to do.  A few years previously I had a transaction with 9 shareholders.  One shareholder with a minority interest initially refused to sell.  Eventually, they changed their mind but it was stressful while this played out.


If no Buy-Sell Agreement is in place and there is tension between the owners and shareholders, the pressure to decide the future direction of the business may be challenging.  This article provides additional information for an owner or shareholder on 
how to avoid buy-sell agreement pitfalls. To help their clients, transportation business brokers should understand the importance of assumption of liability, so their buyers and sellers know who is responsible for any lingering claims. 

The agreement also needs to have information about indemnity clauses regarding operations. For Transportation & Logistics companies, concerns about environmental liability, breaches of warranties, and other issues need to be factored into the indemnity clauses of a Definitive Purchase Agreement. 

Buy-sell agreements can be confusing, so it is helpful to learn how to understand buy-sell agreements and how a buy-sell agreement can save a business.

 

Mistakes to Avoid When Selling a Transport and Logistics Business in California

 

I’m thinking about selling my trucking company. Do I need to hire a transportation business broker? Selling your business on your own might seem like a good option to reduce fees, but a broker will help you avoid common mistakes.

One of the main pitfalls to avoid is undervaluing your cargo ship business for sale. A seller will look at a business as less valuable if you can’t provide them with a plan for future growth. You need to identify opportunities for growth and show which existing resources the business can deploy to pursue these opportunities.

Cash flow can also be an issue. It’s a measure of the financial health of a business, and buyers will expect to spend less if your operation doesn’t generate a steady cash flow since they will have to invest more capital into the project.

Your client base can reduce the value of your business. A buyer will consider that your business carries more risks if you rely on a small customer base or use a few suppliers. Having a few major customers can be an issue if one of these clients opts for a different vendor or can’t pay an invoice on time. Your balance sheet can also suffer if one of the few suppliers you use goes out of business or increases its prices.

Buyers will look at competitiveness to assess the value of a freight forwarding business for sale. They will want to know what sets you apart from your competitors and ask whether you compete on price alone or can offer a unique product or service.

A potential buyer will consider the transition process and ask whether they can fulfill your role. It might be difficult for a new owner to take over and ensure a smooth transition if you’re selling a business that you founded.

There are other common mistakes you can make if you try selling your business by yourself. Sellers sometimes reveal too much information during the due diligence process or withhold important information the buyer needs to know. You might not consider the tax or liability implications of the sale or settle for an offer that doesn’t reflect the value of your business.

A broker who specializes in the transportation and logistics industry can help you avoid these common pitfalls by preparing your business before the sale. They can review and update your growth plan, look for ways to increase your cash flow, and outline a strategy for a smooth transition so that you can offer more value to the buyer.

A business broker can also identify other areas of operation that would create value for the buyer and determine which potential buyers would get the most value out of your business based on their acquisition strategy.

 

Closing

Finally, your business broker will finalize the transaction. They’ll help you through the closing process. Once the closing is complete, they’ll oversee the transition of the business so the seller and buyer are satisfied with the transaction.

Ready to start?

Get in touch today for a free consult; let’s talk about your desires to sell, and how we can best help make it an easy, profitable process for you.

Alternatively, call me today at (916) 570-2674 or click this link for me to contact you.

Certified Machinery and Equipment Appraiser

Andrew Rogerson; Sacramento, CA

is a business expert of 35+ years, a 5-time successful business owner, Certified Mergers & Acquisition Professional (CM&AP), Mergers & Acquisition Master Intermediary (M&AMI), Certified Business Broker (CBB), author of 4 books, and he gives speaking presentations on request.

Andrew helps business owners with a business in California, plan and execute buying or selling a business, and consults with business owners on how to make their ventures stronger so they increase in value.

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    Carmichael, CA, 95608-5788

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    EMAIL

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    Buying or selling a business is a complex process – and you shouldn’t go through it alone. You need an experienced business broker to guide you through the process.

    We make buying and selling businesses simple and straightforward. We’re qualified to handle the most complicated aspects on behalf of our clients, ensuring you walk away satisfied.