Put your truck fleet up for sale, even if it’s not

Whether or not you are interested in selling your business, business owners should always keep it “staged” and ready for a sale when the right opportunity arises.

“You wouldn’t sell your car with two flat tires. You wouldn’t sell your house without cutting the grass,” said Mark Seymour, president and CEO of Kriska Transportation Group, at the Truckload Carriers Association’s Bridging Border Barriers conference in Mississauga, Ont., Nov. 17. . sell your business if it is not clean. The buyer will remove the covers and look for anything that isn’t clean. And if you have a lot of dirt, it’s a waste of time.

So how does a business owner prepare their business for sale? It starts with discipline, Seymour pointed out.

“Whether you want to sell or you never want to sell, discipline is important,” he said.

(Photo: iStock)

Preparation for sale or acquisition

Jim Peeples, president and CEO of Challenger Motor Freight, has been brought into the organization with a mandate to instill discipline and prepare the company for sale, or perhaps even make his own major acquisition. . Either outcome would require discipline. The process ended with the sale of Challenger to the Fastfrate group.

“It took a long time,” he said of the process. “There were a lot of things that were broken and it takes time to fix them. After a number of years, we’ve come a long way with financial results and processes and safety results and all the things that are important to running your business. Then we had the opportunity to have conversations with other like-minded trucking companies to engage in a potential sales deal. »

He added, “If we hadn’t cleaned our house…we probably wouldn’t have closed the deal.”

Discipline also means maintaining appropriate equipment replacement cycles, even if it means going into debt.

“Don’t be afraid of debt,” Seymour said. “Keeping your business fresh and ready is necessary. Buyers will reduce the value of your business if you stop your cap-ex cycle to reduce your debt. You can’t stop replacing equipment.

Before closing the sale of Challenger to Fastfrate, Peeples had orchestrated six other mergers and acquisitions during his career. He admits that several have not worked as expected.

Cultural adjustments

“Two things stand out from those that didn’t work,” he said. “The first is to ensure that the cultures of the two organizations match. They absolutely have to adapt. Second, if you have competing abilities in an organization when you come together, an organization still wants to lead. This creates a huge level of disenchantment on the part of the organization that fails to lead.

Of those deals that don’t work, Seymour said some were simply not a good fit, while others were mishandled.

“There are bad deals and then there are deals that are mishandled,” he said. “If you get a bad deal, it’s your fault.”

Seymour added “speed kills” when it comes to making an acquisition. Focus on due diligence and don’t become emotionally attached to a transaction, he urged. “We’ve had deals that we didn’t close in due diligence. Everything felt really good until we pulled back the covers and found shit that hadn’t been asked or disclosed. It really sucks, because we’ve already spent time and money on it.

Peeples added that deals aren’t done: “Sometimes those are the best decisions you make.”

Remove emotional attachment

Getting a third-party assessment is imperative, Peeples said. This helps remove owners’ emotional attachment to their assets.

“The current owner’s view of the value of his fleet means nothing to the buyer,” he said. “Your business is only worth what someone will pay for it.”

A professional third-party appraisal will consider not only the value of the equipment, but also factors such as profitability, debt, cash, receivables and payables. Beyond that, due diligence must dive deep into a carrier’s culture, safety record, and people.

“You can’t fix what’s broken.”

Mark Seymour, Kriska Transportation Group

“You can’t fix what’s broken,” Seymour said. “If you look at a company and you come across something that’s broken, you can’t fix it. The previous owner let it break, everyone around them got used to it and won’t let you fix it.”

A fleet that is positioned for sale must also have committed management in place. While the owner often promises to stay for the transition, Seymour said that’s often not the case once the check is cashed.

“Make sure there is someone out there who is more than capable of being the next leader,” Seymour urged. “We seek to leave good companies alone and protect their brand. If it is the leader – the beneficiary of the sale, who is likely to leave – we end up with a leaderless organization or a ship without a rudder.

As a buyer, Peeples said the value of a fleet’s equipment isn’t the only consideration, but provides some reassurance if other aspects of the deal don’t materialize as expected.

“Worst case scenario I sell all the equipment and take the risk off of what I paid for,” he explained. Seymour compared it to a pre-nup: “You prepare for the worst before you even get in there.”

Avoid Driver Inc.

When evaluating a fleet for a potential acquisition, Seymour said red flags would include the use of the Business model of Driver Inc.poor CSA and CVOR scores, and lack of safety culture.

For Andy Transport, being in a ready-to-sell state without actually being for sale attracted investment from Solidarity Fund QFL, a Montreal-based private investment firm that took an undisclosed minority stake in the company last month. .

“We didn’t have much to clean up when we hosted the FTQ,” said Andreea Crisan, president and CEO of Andy Transport at the event. “There wasn’t much to do as we were running disciplined and we were very skinny.”

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