[DEVIL'S ADVOCATE]

Hello,

First of all....

Please dont post any rant's or rave's about dont or do, do it.

I am interested in the "financial's" of deciding a purchase price, how to assess the business, all the in's and out's of purchasing a trucking concern. Quite simply, if you have never been involved in the purchase of a fairly large trucking co., please don't respond.

I have a friend who is interested in purchasing a car hauling business.
The purchase would include----
A, 900 customer base of snow bird's from the Albany NY area down to Fl.
9--10 car truck's
Misc. support trucks ie, smaller hauler's and trailers.
Car hauling brokerage business to compliment the hauling business.
3-4 acres of property with buildings to service the truck's.


Anyone been involved with the purchase of anything like this???


Thank's in advance.
Be good, Jim

[Justruckin]

Originally Posted by DEVIL'S ADVOCATE

Hello,

First of all....

Please dont post any rant's or rave's about dont or do, do it.

I am interested in the "financial's" of deciding a purchase price, how to assess the business, all the in's and out's of purchasing a trucking concern. Quite simply, if you have never been involved in the purchase of a fairly large trucking co., please don't respond.

I have a friend who is interested in purchasing a car hauling business.
The purchase would include----
A, 900 customer base of snow bird's from the Albany NY area down to Fl.
9--10 car truck's
Misc. support trucks ie, smaller hauler's and trailers.
Car hauling brokerage business to compliment the hauling business.
3-4 acres of property with buildings to service the truck's.


Anyone been involved with the purchase of anything like this???


Thank's in advance.
Be good, Jim

In all honesty, the question really does not have an answer until you or your friend can see the books. Until then, just pull a number out of thin air. You should also want to see the businesses banking statements to back up the books. And I would also consult an attorney, and have a good accountant go over the numbers to make sure everything jibes.

I would also want to see some local information regarding current real estate prices. And you would also be wise to check on the zoning of this property. If you or your buddy buy it, will this business still be able to be operated at its present location under new ownership? Check with the local officials, you might be surprised at what you find. I would also check the zoning of the surrounding properties and plans for any future development for said area. This could have either a positive or negative effect on your purchase plans.

This is just off of the top of my head. I am sure others will add their .02

[no_worries]

Assuming the business can be operated as it always has been, I would estimate 3-4 times this year's net income plus the price of the equipment and property. As stated before, study those numbers carefully.

[GMAN]

Devil's Advocate, 9 trucks is not a fairly large trucking company. Anything under 50 is considered small by most in the industry. Some consider 250 as small. I would want to see certified financials at least for the last 2 years, preferable for the last five. You can tell a lot about a company from the P & L and Balance sheet. There are a lot of customers, but how many of them are repeat and how often? How long have they been a customer? Are the trucks stinger or high mount? What type of trucks and age? Peterbilt, Freightliner, etc., What about the trailers and head racks? Are they Cottrell, Delavan, etc., ? The brand of both can greatly impact the value. Is there outstanding debt and can it be assumed? What about employee's? How long have they been with the company? Will they stay? How long has the company been in business? What about key employee's? Will they stay and how long? I would want to know more about their brokerage business, if it goes with the company. How many carrier's do they have and for how long? What about the carrier's safety record? I would want to check about the insurance claims they have had. I would also want to have the property appraised.

From your post, I assume that he doesn't know anything about the auto hauling business. It would be best if he could get someone with experience to go in and evaluate the equipment. There can be a significant difference in the value according to brand of truck and trailer. I would have a CPA check the books over, if he doesn't know anything about accounting. At some point, an attorney should be brought in to look at things. In valuing any business and trying to establish a value, in it's simplest form (assets - liabilities + good will = value).

[GMAN]

Any progress on the trucking company, Devils Advocate?

[DEVIL'S ADVOCATE]

Hey G Man,

Have not talked to my friend in a couple of days...
I figured he needs some thinkin time.

Will keep you apprised on the situation.

FYI....I may have found a 5 pack in real nice shape for around 12-14K Good starter truck.

Be good, Jim

[roadranger]

A friend of mine was making outrageous money hauling snowbirds from New England. Obviously a seasonal business though. If your friend doesn't know the ins and outs of the business personally there better be a manager that comes with the business that can keep him from !@#$ing up the business as I suspect that would be real easy to do no matter how well it is going now. But if there was such a manager you have to ask yourself why he isn't buying out the business? I can see buying a franchise type business you know little about as the franchiser usually has a great training program and support for new owners but I'd place my money solidly against your buddy succeeding - sorry...

[roadranger]

Oh yah - the tractor I just put on the road was a high mount with a head rack when I bought it. The previous owner blew up two rear ends on his F350 in six months pulling a three car before finding this little single axle sleeper to pull it. He was a diesel mechanic that thought the grass looked greener on our side of the fence :lol: . He bought it out west for $5k and ran it for four months, putting anouther 5-10k into it (mostly air conpressor and rebuilding the accessory drive that failed on the way home from the purchase) before he went back to something he could make money at and be home doing. After he couldn't sell it on eBay after listing it three times I got it for what he originally paid and pulled the head rack off (maybe build a lube rack out of it or a car trailer?). Moral of the story - easy to buy in, hard to sell out :shock: .

[GMAN]

Originally Posted by DEVIL'S ADVOCATE

Hey G Man,

Have not talked to my friend in a couple of days...
I figured he needs some thinkin time.

Will keep you apprised on the situation.

FYI....I may have found a 5 pack in real nice shape for around 12-14K Good starter truck.

Be good, Jim

Your friend has a lot to consider. If you can get a decent truck for $12-14M that would be a good way to start, rather than having to spend so much on a truck starting out. It is much easier to make money if you don't have big equipment payments.

[thejunkman]

I havent seen this asked yet, but the number 1 question I would want an answer to is

"Why are they selling?" Unless you can clearly see that its an older owner who wants to retire, has no dependants involved, and has a good reason why the upper manager(s) dont want involved(if no one wants the business from within does that speak for itself?), then its not worth going farther.

If the owner wants to try something new, and the business is doing well. It will usually be ran by someone else, but ownership is retained

Most of the headaches come early on, and it seems like what you are mentioning is an established business, so the early bird beginner kinks should be worked out by now. There is always a reason for a business being sold. If it was running as smooth as a glove, unless of retirement,heath, etc there should be no reason to sell it.

You either pass control to another manager, but retain ownership, pass it down in full, an upper manager buys it from within, etc. If the owner is tired of it, then why is he tired of it now, and not when building the business?

9.9 outa 10 times, if a business is being sold, there is a big reason why it hasnt already been sold. If there was no reason that they wanted to sell, or they were "getting tired of it" I wouldnt care how anything else looked, because there will be more than enough skelitons in the closet that may never be found for a long time.