subject: Ahern and Associates - Selling Your Trucking Business Part One [print this page] Many prospective business sellers have contacted us with several concerns. Namely, they would like to sell their business, but they don't know how. Additionally, they would like to know:
What does the process involve?
What is my company worth, in today's marketplace?
Should I hold on to the business for another 2-3 years?
How do I begin the process?
How do I keep the process moving, to conclude a sale?
These are all valid concerns, however, transportation analysts, investment bankers, business brokers, and transportation consultants, all have their opinions, on how to begin the process. Having sold in excess of 300 companies, we always state (categorically) that the process does not start with evaluating the sales price of the business. The process starts with determining if you are ready to "let go". For many of you that have attended my transportation seminars, or have viewed my video podcasts, or read my newsletters, you know that the first part of the process is to prepare yourself emotionally to let go.
If you have owned a business, and nurtured it for many years, then selling your business is like planning your own funeral. A major portion of your life is passing you by. If you are not prepared emotionally to "let go", a sale will never take place. As part of the sales process, I counsel Buyers, and Sellers, on how to complete this process successfully. First of all, don't ever believe that you can sell your business, and retire and do nothing the rest of your life. That won't happen! It's very important that you have a plan and goal, once you sell your business. You may want to travel around the world, you may want to devote your time to charity, or you might start another business. However, you must have a purpose in life, after you sell! At the end of the day, you have to be prepared to let go, which is a very difficult process. It is very emotional and draining.
Many people find it so difficult to do, that they just don't do anything. How do you prepare yourself to let go, and what can you expect when you let go?
Those are two (2) crucial questions that you need to make before you are ready. First of all:
1. It is very important to understand that once, you sell your business it is like selling your house.
2. Once a Buyer purchases your home, you can no longer tell that Buyer what color to paint the house.
Most sellers want all their employees to be taken care of, to have jobs and to have security for life. My response to that Seller is, "tell me what portion of the proceeds of the sales price, you want our client to "carve out" to give to your employees." and 9 out of 10 times the response is, "that is not what I meant." You cannot expect a Buyer to purchase your business, and have the same loyalty to your employees as you do. If you believe that you are morally or ethically obligated to take care of your employees, then it is up to you to devise a mechanism.
To compensate them for what you believe they are entitled to; it is your responsibility! Don't expect a Buyer to assume your responsibility. The second thing that you need to do is, be prepared to not look back. Once you sell your business and you receive the purchase price for your business, you can't look back and second guess yourself. You need to let it go, and go on with your life. As you are going through this process, there are other variables that come into play, such as, "Am I going to achieve my goals and objectives monetarily" and "Will I be able to not worry about my family's financial future; all these things are important."
The most crucial part of your decision is to have a purpose, after the sale and it is not playing golf every day. When selling a business certain job functions will be eliminated such as duplication of overhead,billing, collecting, direction of D.O.T. and accounting. The key elements of the business, which are: operations, sales, marketing, etc. Those normally will stay intact.
At the end of the day, you must understand that when a trucking/logistics company is purchased, three (3) have to happen.
1. It has to "cash flow";
2. Service debt, and;
3. Have a return on earnings.
I recognize that making these statements is very easy, but understanding the ramifications of your business is very difficult. Therefore, the first part of the process is making a determination that you are ready to get out of the business and recognizing a portion of your life is over. Recognize that your business will not be the same when you sell, and make sure that you have a purpose in life, once you sell your business. I cannot emphasize to you how important this process is, because if you don't go through this process, you will never be happy. Approximately, 10 years ago, I sold a business, and I told the owner that he had to have something to do with his life. His comment to me was, "get me the money and I will take care of my life." Within 3 months, that owner went through a deep depression, because he had no purpose in life; yet he had a lot of money. In closing, the most important part of selling a business, is to be mentally prepared to let go, accept the fact that the business won't be the same once you sell the business, and to have a purpose in your life, going forward.
I recognize that some of my comments might be somewhat rhetorical to some of you, but having sold so many businesses, I can tell you, that if you don't accomplish this process, even if you sell your business, you will not be happy. Part two of this series will cover: * How to value a business? * How to locate a legitimate Buyer? * How to chose representation? * What you should expect from the people that you engage in the process? * Ultimately, what you should anticipate in return?, and; * When is the time to sell your business? If your company is profitable you will always have something to sell. If you are holding out for a return to the days, when a company could receive 7 to 9 times EBITDA, forget it. Those days are gone! Under the new tax structure, this year is definitely the time to sell if you offer value. Next week, I will discuss company evaluations.
Ahern and Associates - Selling Your Trucking Business Part One
By: Andy Ahern
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