We may live in the so-called digital age, but there’s no getting around the large amount of paperwork required when you put a trucking business for sale. From financial records to agreements that prevent information leaks, pulling together the right documentation for a sale can be an arduous task. Here are some of the most important documents you’ll need for a successful transaction.
Whether you know it as a selling memorandum, offering memorandum, or COM (confidential offering memorandum), this document serves a singular purpose: to inform buyers about your trucking business without giving away identifying information. As the first communication between seller and buyer, an offering memorandum must be intriguing enough to capture buyers’ attentions, thorough enough to hold their interest, and honest enough to accurately depict what the purchase of your business will entail.
Initially, all communications with a prospective buyer should protect the anonymity of your company. If word were to get out that your business was on the market, it could trickle down to customers and employees, threatening the stability of business operations. Meanwhile, competitors might be able to access customer lists and other sensitive information. After screening buyers to ensure they are qualified, your trucking company business brokers will require them to sign a non-disclosure or confidentiality agreement before turning over important company details.
Financials and Tax Returns
Not only are clean financial records good for business, but they’re good for business sales. Potential buyers need to be able to see how you reached your trucking company valuation. If your financial documents are poorly prepared or scattered all over the office, it would be wise to enlist an accountant with transaction experience to organize balance sheets, P&L statements, audit statements, and tax returns from at least the past three years. Since independent businesses often prepare financial statements to minimize tax liability, their financials may not accurately depict fair market value. This can be remedied by having your accountant recast financials to add back discretionary income, illuminating true owner benefit.
Often times, strategic buyers will purchase a company for benefits beyond trucking cash flow – such as existing clients and experienced employees. If you have standing contracts with customers and suppliers or agreements with employees, these documents should also be included when putting your truck business for sale.
Though your business may feel like a single entity, it is actually made up of many separate tangible and intangible assets, from equipment to employee contracts. A purchase agreement specifies which of these assets will be transferred to the new owner, as well as when and how the transfer will occur. Think of the purchase agreement as a detailed receipt for your buyer.
Selling a trucking company may be the most complex transaction you undertake in your lifetime. Leaving out key details or relying on sloppy documents puts you and your buyer at risk. With guidance from intermediaries experienced in the truck business, sellers can present the clearest possible picture of value – allowing for the smoothest possible sale.