Perspective: When a Buyer Comes Calling, Be Ready
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An environment marked by high access to capital and an expected rise in interest rates has created a larger-than-normal pool of buyers racing to acquire trucking businesses. For many fleet owners, potential buyers are either knocking on the door, or soon will be. Being prepared when a suitor comes calling can directly affect your ability to either strike a good deal now or position your company for opportunities down the road.
Either way, there are three things to consider when preparing for the moment when the offer to sell comes along.
When a buyer expresses interest in purchasing a trucking business, some owners avoid engaging in discussions. Inconvenient timing, a lack of comfort with the prospective buyer and fears about protecting confidentiality are common concerns. However, with the right preparation, owners can feel comfortable opening a dialogue that effectively manages all of those concerns and also yields valuable insights.
Even if they’re not interested in selling, engaging with prospective buyers can help owners advance the longer-term interests of their families, employees and communities. What is learned through exploring a possible transaction may significantly influence an owner’s ability to address those goals when the time is right to sell. At the very least, holding the discussions can help owners learn more about the transaction activity around them and how it may affect the competitive landscape.
Know the Facts
If a buyer comes forward with an absolute premium offer, would you be able to recognize it? Owners of good businesses should expect to receive offers. Being prepared with a credible third-party valuation of the business can help with crafting responses to offers quickly and decisively. The information contained in this valuation can be used to create a one-page teaser for the company, which summarizes business and investment highlights.
Should a prospective buyer come forward, execute a nondisclosure agreement and supply the buyer with the teaser. Also ask the suitor to supply an indication of interest that outlines a price range for a potential offer. Many buyers can produce this offer framework in a week or two.
As long as you have a third-party valuation from a source that understands the trucking industry, you should be able to determine if the buyer’s offer range is consistent with fair market value and/or your overall exit strategy objectives. In other words, get the information you want without a drawn-out process that ultimately goes nowhere.
Leave the Door Open
If you are truly not interested in selling or engaging in discussions with a buyer, be courteous and respectful to the party expressing interest — even if the offer isn’t immediately attractive — because your goals and priorities could change overnight. If you ignore or disrespect a quality buyer, you may regret it should your goals change.
Let the prospective buyer know that if something changes on their end or yours, you’d be open to revisiting the possibility of a transaction at another time. Be courteous and polite and you will multiply future opportunities.
Fleets that apply all three of these tips can position themselves to have more strategic options. Most importantly, they protect their confidentiality and time, learn valuable insights about the competitive landscape and promote the interests of their families, employees and community.
Spencer Tenney is president and CEO of Tenney Group, a merger and acquisition advisory firm that has been dedicated to the transportation industry since 1973