Running a delivery or trucking company can be rewarding and profitable, but every business has a natural life cycle that usually includes a sale and transfer of ownership. If you’re planning to sell your delivery company, it’s important to create a well-designed plan to maximize value and minimize disorganization and stress.
Step 1: Get a Business Valuation
Business valuations are complex, but it’s one of the most important steps in the sale preparation process. There are two fundamental ways to approach valuation, and business owners should select the method that best represents the true worth of the company.
Asset Based Valuation: An asset-based valuation is used primarily by businesses that own considerable tangible assets but have low or non-existent sales. It’s a relatively simple method that establishes the value of the business by calculating the company’s total intangible and tangible assets.
Multiple of Earnings: For a trucking or delivery company, determining a realistic earnings multiplier can prove advantageous in setting the valuation. This is especially true for healthy businesses with escalating profitability and sales velocity. In essence, the buyer and seller agree on the components included in the defined earnings formula. A multiplier is then applied to that figure, and the resulting total is the basis for establishing a preliminary sales price
Step 2: Prepare Appropriate Paperwork
In order to receive the highest value for your delivery or trucking business, financial information and supporting documents must be meticulously organized and easy to understand. When your asking price is accompanied by strong financials, it conveys a sense of confidence to the buyer. Always make sure the following documents are included in your presentation package:
- The last three years of profit and loss statements
- The last three years of balance statements
- Three years of federal income tax returns for the business
- A comprehensive list of vehicles, fixtures and equipment
- Lease and lease-related documents
- Current payables and receivables
- A list of loans against the business (amounts and payment schedule)
- Copies of any equipment leases
- If applicable, an approximate dollar value for the inventory on hand
Step 3: Prepare the Business for Sale
Many delivery company owners are disappointed when they receive an offer from a prospective buyer that’s lower than anticipated. In most cases, an unacceptably low offer represents hesitancy or fear on the part of the buyer. These impressions can be largely mitigated by ensuring that you have properly prepared your business to be transferred to the new owner with minimal disruption to daily operations. When you decide to sell your delivery company, here are some ways to maximize value while expressing a sense of cost consciousness and professionalism:
- Renew customer contacts
- Review customer concentration
- Enhance maintenance contract sales
- Review and renegotiate leases on trucks where appropriate
- Evaluate the service truck fleet and sell or dispose of obsolete, broken and underutilized assets
- Review property lease and renegotiate more favorable terms if possible
- Interview key employees to determine their long term goals and obtain employment agreements as needed
Organization is the Key
Always remember that a prospective buyer knows absolutely nothing about your business at first glance. In fact, they may not even be familiar with the delivery industry. It’s important to address these reservations by keeping detailed financial records, enforcing clear and concise employee policies and a maintaining a clean facility. Buyers who can envision themselves running your company are likely to extend a more generous offer.