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Do You Have Too Much Debt to Sell Your Ambulance Business?

Last updated on June 12, 2012 by Sozo Staff

Many business owners fear having too much debt will drive away buyers. As a result, they may continue to operate an underperforming medical transportation business – often accumulating more debt in the process – in hopes that their bottom line will miraculously improve.

But while it’s true that some entrepreneurs are wary of taking on the liability of another owner’s debt, others see a troubled ambulance business for sale as a prime investment opportunity. In fact, some buyers specifically seek out poorly-performing companies in search of strategic benefits.

Buying a Business Is Cheaper Than Building One

Starting a business from scratch is a risky and expensive venture. Even with substantial research, it’s impossible to know for sure if a market is viable and if earnings will cover start-up costs. After buying your ambulance business and making value-enhancing investments, an investor may still spend less than he would by building his own ambulance company piece by piece. By making small but strategic cost cuts, a buyer with lower financial expectations may be able to boost earnings from the break-even point to a modest profit.

Poorly Performing Businesses Can Still Have Potential

One of the most common myths in business is that profits are the same as value. Value is too complex to be calculated with a single formula. Like beauty, it’s in the eye of the beholder. Even if earnings fluctuate due to an unstable economy or questionable management decisions, a business can still have potential. For example, a larger company may be able to dramatically lower costs by purchasing a flailing smaller business. The savings that result from supplier discounts, increased customers, and other benefits may be more than enough to cover losses incurred by debt.

In the competitive ambulance business industry, a company with specialized medical equipment, a desirable location, or an established customer base may be worth its weight in gold – with or without debt. If your company enjoys steady cash flow, even though most of that cash goes to paying lenders and investors, it may still hold potential for a buyer able to streamline operations.

Finding the Right Buyer for Your Business

You may be overwhelmed by debt, but the right buyer could see your burden as an advantage. Maybe a larger competitor with the right resources can afford closing out your books. Perhaps a buyer is looking for a business that can report a loss in order to reduce tax obligation. Every business has an ideal buyer. A professional transportation business broker has the savvy to identify and attract prospective investors most likely to benefit from (and pay a premium for) your ambulance business for sale.

Filed Under: Transportation

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