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Understanding How Buyers Think Prepares Owners for More Rewarding Business Sales

November 1, 2010 By Sozo Staff Leave a Comment

Buyers and sellers of trucking businesses often find themselves on different pages or even in different worlds when discussing a particular trucking business for sale. One factor contributing to the disconnect can result from sellers not understanding how buyers think about and approach transactions. Below are a few tips that will help you begin to get on a path to a more rewarding trucking business sale.

The fact that your business is breaking even or losing money may not be a deterrent for the right buyer.

If your trucking business, like many others over the past 24 months, is struggling financially, do not make assumptions about its ability to attract motivated buyers. To the right buyer, your bottom line may mean very little. A strategic buyer will likely absorb your accounts, eliminate duplicating overhead, thereby making your current financial performance secondary to what the combined operations can do together.

A buyer will pay more if you can give him or her the ability to justify it.

It is very common for buyers and sellers of trucking businesses to be miles apart when assessing the value of a particular trucking business. This gap is usually because the buyer doesn’t understand the complete financial impact associated with acquiring the trucking business. Of course there is also a possibility that the seller does not completely understand fair market value for trucking businesses. Being able to effectively demonstrate the new monthly cash flow created from the deal, the increased enterprise value of the buyer’s existing transportation business, and the time required for the buyer to pay for the entire transaction can greatly expand the buyer’s appetite for getting the deal done.

A buyer has both long term and short term goals that will need to be addressed through the transaction. This can benefit the seller.

A buyer wants to acquire your trucking business for the least amount of money possible. However, sellers need to understand that strategic buyers have short term financial goals that can take precedence over the sale price of the transaction. When a deal is structured in a way that allows the buyer of your trucking business to address immediate cash flow needs, it is easier for buyers to accommodate and assist the seller in achieving his or her overall transaction goals.

Many buyers misunderstood or underestimate what the acquisition of your trucking business can do for them.

Don’t assume another trucking business owner understands and can identify the value associated with acquiring your trucking business. If another trucking business owner has experience with strategic acquisitions, his experience may not apply to acquiring your trucking business. So relying solely on the buyer is a mistake. And do not assume that you can effectively communicate the financial benefits of acquiring your trucking business.

A buyer for your trucking business may come from anywhere.

In all of The Tenney Group’s completed deals over the past 18 months, the average distance between buyer and seller was 300 miles. This is the reality of the buying market. Sellers need to understand this so they can be properly positioned to attract the maximum exposure for their trucking businesses. Any trucking business in America, for whatever reason, could have a strategic interest in buying your trucking business. Do not limit your options.

A buyer may not know he or she is a buyer yet.

The best buyer for your trucking business could be an existing trucking business that may currently have no interest in buying your business or any other trucking business for that matter. They may be scared to death of acquiring another trucking business. However, with time, persistence, education, and coaching they can be converted into confident buyers who can justify paying you the highest sale price. Make sure your sale effort proactively addresses buyers who do not currently identify themselves as buyers.

Filed Under: Transportation

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