The transportation sector can be a volatile place in the business world. Likewise, selling such a business has its own unique hazards. Knowledge is the first defense against disaster. About 90% of sellers and 80% of buyers are approaching this transaction for the first time. Here are a few frequently asked questions and their answers about the process of selling a transportation business.
1. What time is most opportune to sell?
The answer to this question will vary business to business. Some factors to consider include, but are not limited to, equipment reinvestment needs, capital gains tax, available working capital, the economy, buyer readiness, loss of energy or passion, equity position in equipment, etc. Finding the right time to sell is a completely individual decision.
2. How long does the selling process take?
The International Business Brokers Association projects selling a small business will take 9-12 months. With the right kind of help, a transportation sale can take 4-5 months below that average.
3. What needs to be done in order to prepare?
The first step is to obtain a business valuation. This process will clearly layout where the business is coming from and where it is going. Make any adjustments necessary in order to obtain the desired exit goals. Organize all finances in an easily accessible manner. Bring in a tax transaction specialist well before the sale. Lastly, streamline the business by trimming down any manuals and refreshing the website design.
4. How much is the company worth?
Fortunately, this question is the easiest to answer. A business is worth what a buyer is willing to pay. A buyer with a strategy in mind will likely pay more money than a financial buyer. Service pricing, discretionary earnings and customer concentration are just a few factors that influence the amount of money a buyer will pay.
5. Can a business which is losing money still sell?
The strategy buyer may see profit where others see loss. An industry specialist could advertise the business correctly before all the strategic options vanish.
6. Why hire a transportation transaction specialist?
Any business broker is qualified to sell a transportation business. However, they may not be experienced enough to do it well. A transportation transaction specialist knows the intricacies of the transportation industry.
7. Why not hire a local business broker?
According to the Tenney Group, a transportation business broker located in Texas, the average mileage between a buyer and seller is 300 miles. A company that deals in local traffic will not have the scope to properly sell the business. The Tenney Group has been in the transportation industry since 1973; therefore, they have the knowledge needed to complete a sale. The Tenney Group has the expertise to acquire a buyer by explaining the value of the acquisition in a confidential manner.
8. Could a transaction specialist help if a buyer has already shown interest?
Just because a seller found a buyers does not mean the transaction will go smoothly. Due to each party’s individual assessment of the business’ value, discrepancies arise. A transaction specialist will help decrease those discrepancies. The Tenney Group offers a specialized service known as “Negotiating Only.” This service facilitates a smooth transition from seller to their preferred buyer.