It may not be news that the trucking industry is dealing with a driver shortage, but what about an owner shortage? Across every industry, the nation’s 77 million baby boomers are forming a mass exodus as they retire from the workforce – not only as employees, but as business owners. After years of blood, sweat, and tears, many transportation business owners hitting their 60s are ready to enjoy the fruits of their labor. For prospective trucking business buyers able to make a move at the right time, it may be possible to reap the rewards of the previous generation’s hard work.
Prices will be pushed downward
It’s Economics 101: When supply exceeds demand, prices are driven downward. Unless the number of buyers interested in purchasing trucking companies for sale suddenly skyrockets, business values will naturally fall as more businesses flood the market. Those interested in buying a trucking business for sale or expanding an existing company through trucking acquisitions or mergers will not only enjoy more options, but also significant negotiating power. Of course, this doesn’t take into account the state of the economy. Many would-be buyers and sellers have been holding off as they wait to see what the market does next.
Timing will be everything
Timing has always been an important factor in a successful business sale, but it’s even more critical now. With the potential for a glut of trucking and freight companies for sale, all owners should consider updating their exit strategies and obtaining a current trucking business valuation. Business owners considering a sale may want to take actions to enhance value and put their business on the market sooner than anticipated, before prices take a nosedive. Business value can change dramatically in either direction in just several months. Planning in advance is the most effective way to maximize performance and price.
Terms will matter more
Typically, a situation in which supply is higher than demand is characterized as a buyer’s market. But while interested investors may have their pick of business opportunities, it’s unlikely that many of them will be able to afford a purchase with traditional financing alone. Tighter credit conditions may help give sellers some leverage. By offering seller financing and other attractive terms, trucking business owners may be able to command a higher price for their company and increase their chances of a sale. All-cash deals are already falling out of favor, and the trend is only expected to continue as baby boomers exit the market.
Whether you’re on the buying end or selling end of the market, casting your line at the right time increases the chances of a satisfying deal. An industry expert such as a truck business broker with The Tenney Group can guide you through the preparation and execution of a successful and rewarding transaction.