Merger & Acquisition Insights

Selling a Business During an Uncertain Election and a Global Pandemic is Crazy. Or, Is It?

Posted on October 27, 2020 by admin

Timing a transfer of business ownership is a challenge. Even when we take economic and political factors off the table, owners still have a host of other things to consider as they work to promote the interests of their families, employees, and legacy. 2020 has been full of unexpected turns and twists which make the temptation to kick this important responsibility down the road even more appealing.  Not so fast. As a potential seller, you have unique advantages right now that could transform the way you experience an exit from the trucking industry. Here are three to consider.

  1. Valuation

The market is making strong offers available to trucking business owners. As organic growth becomes more limiting due to driver recruitment and retention challenges, acquisitions are becoming critical to the overall strategy of trucking firms. COVID-19 has both expanded the pool of buyers and helped clarify which acquisition targets should command top valuations. COVID-19 has also demonstrated how risky it is to be overexposed in one customer or industry. Additionally, trucking companies are aggressively paying to diversify their risks across different industry segments.  This means that even if you are not thrilled about your current performance, it is possible that your business may solve a big problem for a buyer. Low interest rates are also materially affecting valuations and deal structures for sellers in a positive way

 

  1. Ideal Tax Environment

Any change to the capital gains tax following this presidential election requires a choice from business owners. If the capital gains tax goes up, business owners will need to offset the tax through significant performance in order to create the equivalent “net” financial outcome from a future sale. The choice will be to increase the time and energy you put in the business, or concede a reduced future “net” sale outcome. Depending on how much of your financial retirement is tied to the sale of your transportation business, this is a very big deal. Do your homework before you double down on your current investment. If the fuel is low in your tank, be honest about your own limitations and protect what you built and your ability to bless others in your next chapter of life.

 

  1. Select Buyer with the Right Culture Fit

In all the 47 years Tenney Group has served transportation business owners, I have never heard one say “I wish I would have sold later.” On the contrary, I could introduce you to hundreds who have said “If only I had sold a few years sooner…things would be a lot different.” It is human nature to procrastinate. What bothers owners most is feeling like they don’t have control over who takes the reins of the business and who takes care of their people and customers. In the current environment, there are more buyers than sellers…many more. Take advantage of this leverage so you can hand pick the trustee to take your business into the future and protect your legacy. You can always make more money, but you only get one chance to pick the “right” buyer for your business.

 

Be encouraged. Selling a busines during an uncertain election cycle and a global pandemic may actually be the opposite of crazy. It may be a blessing to you, your family and the future of your business.

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