Owners of trucking businesses may be surprised to learn that even struggling trucking businesses can be a choice investment for businesses and investors, particularly to those seeking to pursue trucking mergers between one parent company and other small units. There is hope for these owners to be freed of their business obligations, and, while they will want to price their business competitively, given its condition, there is no need to take a large loss in the sale.
Investors seeking to purchase struggling businesses are in a unique position to essentially extract the highest value from such a company without having to work to retool its current business processes, and, for this reason, such businesses are often quick to sell when placed with the right broker. Two ways in which investors can realize maximum profit are through elimination of overhead, and value pricing.
The logistics of integrating an existing trucking business with a newly acquired trucking business may seem daunting to investors, especially if the acquisition is fragile or fledgling, but experienced investors realize that profit can be realized through such a purchase, when the new owner strips away unnecessary expenditures and overhead costs, and manages their resources appropriately in order to realize the greatest profit.
If a company has a great inventory of computer products, trucking equipment, machining tools and more, it can often be purchased for less than the value of these items. Its customer contracts can often be integrated into the existing business’s current book of business, and overhead such as retail space, extraneous employees and other unnecessary debts can be eliminated in the transfer of power.
In some acquisitions of this nature, arrangements can be made to purchase the business assets, without the liabilities, which can provide a great opportunity for additional savings, and increased profits. This often happens after a formal insolvency has been filed, or when it is possible to extract assets from a limited liability without also acquiring liabilities.
Understanding the Real Buyer Market
Potential sellers of trucking businesses often misunderstand the market for buyers when they start considering a sale. As a result, they can become very discouraged about the possibility of getting a deal done when the pool for buyers seems so small especially for a struggling business. In all of The Tenney Group’s completed transactions over the past 24 months, the average distance between buyer and seller was 400 miles. Many of these transportation businesses were struggling companies. Getting a deal done was a component of finding the “right” buyer for the seller. In many cases it was a strategic location, advanced technology, or a unique customer base that made the seller’s business valuable to that particular buyer regardless of the bottom line. The key was finding a way to help a particular buyer accomplish their unique strategic goals through the acquisition.
If you have a struggling trucking company, you still have the ability to secure a rewarding business sale. But getting connected with the right buyer is critical. Make sure you are working with experienced industry professionals who understand how to communicate the short and long term strategic benefits available through acquiring your trucking business. It changes everything about how you will exit the trucking industry.