How to Sell a Trucking Company

If you are a trucking company owner in California looking to sell your business for the best price, here are five valuable tips to get you started.

1. Have an Exit Plan Before Selling Your Trucking Company

While there are many reasons why most entrepreneurs may have difficulties finding buyers for their businesses, the main reason is the lack of an exit plan.

An exit plan is basically a strategy that outlines how you will sell your company to potential investors. This plan mainly involves outlining the range of your asking price so you make a profit when you sell your trucking business.

Let’s take a look at the reasons why you should consider having a business  exit strategy before selling your trucking business.

Give Your Business a Sense of Direction

Among the main reasons why most entrepreneurs have a business exit strategy is because it gives them a sense of direction, allowing them to groom their company accordingly. For instance, if you plan on selling your transportation and trucking business, you will aim to increase its value to attract top-notch investors.

Helps During Unexpected Events

An exit plan can be beneficial in case something unexpected happens, such as a severe accident or a serious illness that will prevent you from actively running your trucking company.

With a business exit strategy, you can move quickly to sell your transportation and logistics business before it begins to lose its value.

Attracts Investors

One thing that will determine whether or not investors will want to buy your trucking business is an exit strategy.

But why do investors ask about an exit plan?

For starters, having a business exit strategy shows how committed you are to your business. Most importantly, it shows how flexible you are if any unforeseen circumstances require you to sell your transportation or logistics company.

Understand the Value of Your Trucking Company

With an exit plan, you will know how much your company is currently worth and the strategies to take to increase its market value.

2. Establish Ways to Increase the Value of Your Trucking Company

Understanding the current value of your trucking company isn’t enough. Establishing ways to increase its market value makes owning the business worthwhile and more attractive to future buyers.

Here are some valuable tips on how to increase the value of your trucking company.

Boost Your Profits

Profitability is no doubt the key selling point of any type of business. There are many ways to boost the profits of your trucking company. For example, expanding your market gives you a diverse customer base, resulting in more sales which could lead to higher profits.

You also need to manage your company’s costs. Try and find ways to reduce your expenses. However, it is important to make sure that you are not reducing costs at the expense of the quality of your services.

Ensure a Positive Cash Flow

Cash flow is just as important as profits when it comes to determining the overall performance and market value of your business. Having a positive cash flow gives any potential investor assurance that you have the means to grow your trucking company.

However, it is important not to equate your profits with your cash flow. Your company might be making good profits but still, have a negative cash flow.

3. Identify the Ideal Business Valuation Calculation Method for Your Trucking Company

Regardless of how valuable your trucking company is, it will only be worth what an investor is willing to pay for it. That is why it is important to understand how to calculate its exact value.

Fortunately, there are many business valuation calculation methods you can use to determine your company’s value. These methods mainly focus on a business’s financial performance, assets and liabilities, and other external factors to determine its economic worth.

As expected, this process can be pretty intricate, so it is recommendable to seek help from a professional. The experts know all the factors to consider when calculating the value of your trucking business.

Here are the most common valuation calculation methods for a trucking company.

EBITDA Business Valuation Calculation Method

EBITDA (earnings before interest taxes, depreciation, and amortization) is the most common business valuation calculation method used to determine a company’s market value. This method excludes expenses such as tax and debts to portray a raw picture of a company’s earnings, therefore, demonstrating its economic worth.

Typically, EBITDA multiples has two formulas to calculate a company’s market value:

• EBITDA= operating profit + depreciation + amortization
• EBITDA= net income + interest + taxes + depreciation + amortization

DCF Business Valuation Calculation Method

Also known as the discounted cash flow business valuation method, DCF is used to determine the approximate value of a company’s investment based on its future cash flow. In simple terms, this method estimates the value of a business’s current investment, such as stock shares, based on the amount of money it will generate in the future.

Market Capitalization Method

This is one of the simplest business valuation calculation methods. Market capitalization is calculated by multiplying a business’s share market price by the total outstanding shares. For instance, if a trucking business sells its shares at $100 each and has already sold 10,000 shares, its estimated market value will be $1,000,000.

4. Understand the Steps to Sell Your Trucking Company

Most entrepreneurs can attest that selling a company can be quite a challenging venture. That is why it is essential to seek help from a professional transportation mergers and acquisitions broker who will take you through the right path to successfully selling your business.

Here are four simple steps to selling your trucking business.

Step One: Prepare Your Transportation Business for Sale

We all know that there comes a time when selling your company might be the best option. That is why it is vital to ensure that your business is well prepared for sale right from the beginning.

There are tons of ways to prepare your company for sale that include increasing your customer base, maximizing your profits, and ensuring that you have a positive cash flow.

These strategies will get you a fair price for your company and keep the business running smoothly even after you have exited.

Step Two: Determine Your Company’s Market Value

We cannot emphasize enough how important it is to determine the correct value of your business. Consulting a professional M&A broker is essential as it will help you develop a realistic estimate of your business’s value. This will bring credibility to your asking price and serve as a measure for your listing price.

Step Three: Prepare the Relevant Documents

Before listing your company for sale, ensure all your documents, such as your tax returns and financial statements, are in order. You can also put together all the documents related to sale transactions. Having all your relevant documents together will show potential investors how committed you are to your business.

Step Four: Find the Right Buyer for Your Business

Finding the buyer for your business doesn’t only entail finding an investor who will offer you the right price, but also finding one that will be a good partner during the process of transition of ownership.

So it is important to first assess your options to ensure that you will end up with the perfect buyer for your company. Seeking assistance from professionals such as M&A brokers can connect you with promising investors.

5. Seek Help From a Transportation and Logistics M&A

As we mentioned earlier, the process of selling a trucking business can be a complex one and may take a long time. Hiring an M&A advisor helps you focus on operating your company and increasing its value rather than marketing it.

Let’s look at why you should consider hiring an M&A advisor to help you sell your trucking company.

M&A Advisors Bring in Potential Investors

An M&A broker usually comes with an extensive network of potential investors. What’s more, their knowledge of the transportation industry enables them to establish a marketing strategy that will attract even more buyers.

M&A Broker Helps You Overcome Obstacles During the Selling Process

There are many obstacles that entrepreneurs may encounter when trying to sell their businesses. These include mistakes made during the negotiation process and pending legislation delays. An M&A advisor can help you identify these obstacles and find ways to overcome them for a smooth selling process.

An M&A Broker Helps You Negotiate for a Better Price

Understanding the exact value of your business may not be enough to negotiate the ideal price for your company. An M&A broker studies your business from all angles and helps you develop the perfect negotiating plan to get the right price for your business.

Understanding the Process of Selling a Transportation Business

Selling a trucking company can be challenging - from finding buyers to negotiating for a great price, there is a lot involved. Plus, before deciding to sell your business, you have to prepare it for sale to get the price you deserve.

Hiring a transportation and logistics M&A advisory firm can go a long way in helping you create an extensive market for your company. An M&A broker also provides you with all the information you need, including how much taxes you have to pay during the selling process.

If you are a retiring business owner looking to exit your lower middle market trucking business in California, here are six tips to get you started:

1. Don't wait until the last minute to start planning your exit. The process of selling a lower middle market trucking business can take a long time, so it's important to start early.

2. Have a clear idea of what you want to get out of the sale. Know your goals and what you're willing to negotiate.

3.  Know what's your company's worth. This is an essential step to take when planning to sell your trucking and logistics business company in California.

4. Choose the right type of buyer. Not all buyers are created equal, so do your research and find the right one for your business.

5. Be prepared for a lot of due diligence. M&A buy-side due diligence is when buyers will want to know everything about your business, so be ready to provide documentation and answer questions.

6. Be flexible with the terms and conditions of the deal. It's important to be open to  negotiation to get the best possible deal for your business.

Rogerson Business Services, also known as, California's lower middle market business broker is a sell-side M&A advisory firm that has closed hundreds of lower middle-market deals in California. We are dedicated to helping our clients maximize value and achieve their desired outcomes. 

We have a deep understanding of the Californian market and an extensive network of buyers, which allows us to get the best possible price for our clients. We also provide comprehensive support throughout the entire process, from initial valuation to post-closing integration. 

Our hands-on approach and commitment to our client's success set us apart from other firms in the industry. If you consider selling your lower middle market transportation business, we would be honored to help you navigate the process and realize your goals.

If you have decided to value and then sell your lower middle market transportation and trucking company or still not ready, get started here, or call toll-free 1-844-414-9600 and leave a voice message with your question and get it answered within 24 hours. The deal team is spearheaded by Andrew Rogerson, Certified M&A Advisor, he will personally review and understand your pain point/s and prioritize your inquiry with Rogerson Business Services, RBS Advisor

Go to the next article: Part of a guide to help sell transportation and trucking company in California series ->

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