Supporting local business is certainly an admirable cause. However, you shouldn’t risk jeopardizing your trucking business sale for the sake of local business brokers. Most small brokers simply don’t possess the industry insight or experience to successfully sell a trucking company. Here are some factors to keep in mind when considering a local broker.
1. Local Brokers Limit Your Market
Over the past 36 months, the average distance between our completed deal’s buyers and sellers has been 400 miles. This means your best buyer might not even be located in the same state, let alone your nearest metropolitan area. Local business brokers are simply not equipped to address the real geographical market for trucking businesses. Their experience, contacts, and clients are all limited to a particular region. Think of it this way. Would you rather cast your line into a small pond with a couple average-sized fish or a large pond with thousands of fish of all different shapes and sizes? By increasing your exposure to a wider market, you increase your chances of hooking a large and possibly high-paying investor. When you shop locally, you are limited to similarly-sized competitors, many of whom may not be able to afford your asking price.
2. They’re Unfamiliar with the Nuances of Trucking Business Sales
Most local brokers sell a lot of brick and mortar businesses, from retailers to restaurants. They don’t usually put up a lot of trucking businesses for sale. Transportation businesses are a different breed with unique regulations, financing needs, and trucking company valuation methods, all of which come into play during negotiations. The single most common deal killer is a lack of information. If your broker doesn’t understand what details a buyer is looking for, how can he be sure to provide them? When millions of dollars are on the table, an investor isn’t going to wait around for your intermediary to learn the ropes. An uninformed broker stands a better chance at breaking a deal than making one.
3. They Often Misunderstand Hidden Value
We all know value depends on basics like cash flow, assets, and market. But value is also in the eye of the beholder, especially when putting a truck company for sale. A broker familiar with the industry can spot the hidden value in your company and use that value to make a compelling case to the right buyers. Does your trucking business employ drivers with especially reliable safety records? This could lower training costs for a potential investor. Do you have a solid inventory of new trucks, machining equipment, or computer systems? Perhaps this will save a prospective buyer time and money when it comes to reinvestment. A local broker may not look beyond a generic business appraisal. But an experienced broker can read your business like a book and use the insight to play matchmaker between you and your most beneficial buyers.