From tires and trucks to customer goods waiting for distribution, parts and inventory are an important part of buying a trucking business. The amount of assets included when an owner puts a transport business for sale can have tremendous impact on the company’s value as well as post-sale operational costs.
Before the Sale
There are two types of inventory: the kind needed to operate the business internally (i.e. trucks and parts), and the inventory scheduled for transportation on behalf of clients. Both types will ideally be addressed before a sale takes place.
Internal inventory like parts and vehicles has value, and should be included in a trucking company valuation. For the new buyer, having existing vehicles and the tires, fuel, and parts necessary to keep them running can help make sure operations continue unimpeded after ownership changes hands. Reducing lag time between buyer and seller keeps customers happy.
It is also necessary to address how the ownerships transfer will affect customer inventory that may be stored in warehouses. Ideally, the buyer and seller will work together to determine how orders will be filled shortly before and after the sale. For instance, maybe non-perishable items will be packed into vehicles by the previous owner to be distributed by the new owner. If perishable items are stored in a refrigerated warehouse, someone will need to cover the cost of keeping the power on while ownership is being transferred. In many cases, a seller will agree to stay on for a few days or weeks to train the new owner. A smooth transition can help customers come to accept the sale, ensuring the continued success of the company.
After the Sale
Many buyers focus on the potential profits of a sale and forget to take into account the immediate costs of keeping a business operational. While a small independent company may be able to store a vehicle and a few parts at home, a larger motor carrier will need to lease or purchase a storage unit or warehouse for inventory. Trucks must insured and maintained, and parts like batteries must be available for quick replacement. Depending on the type of goods being hauled, refrigeration or other types of specialty storage may be necessary.
Whether you are selling or buying a trucking business, a third party specialist such as a truck business broker can assist with the sometimes complex issue of valuing inventory and parts. When you understand the value and costs associated with your trucking company, you will be in a better position to reach a fair deal – no matter which side of the table you’re on.