Issues and complications are expected to arise during any business sale. In the transportation industry, there are 5 common issues that may arise:
1) Inventory Valuation
One aspect that is often overlooked during a business sale is the appropriate value of inventory. The seller may have an inaccurate value based on what he/she feels the equipment is worth. The buyer, on the other hand, may give unrealistic offers for the company’s inventory. Also, a buyer may not necessarily need all of the inventory that is offered. The buyer and seller may already be weeks into negotiations when an inventory issue arises. It can often bring the sale to a screeching halt.
2) Unqualified Buyer
Some business brokers allow any entrepreneur with a business card to draft offers for a transportation business. However, they may neglect to find out if the buyer is financially qualified to purchase this particular business. An offer may be drafted and negotiations started. Much to the seller’s dismay, they find out the buyer is not financially able to purchase their business. They may have turned down or lost other potential buyers while wasting time dealing with an unqualified buyer.
Confidentiality becomes an important aspect of a transportation business sale. If your employees learn of a possible sale, it may lower their morale and work ethics. A competitor may use your sale as an opportunity to divert your current clients. If you begin losing customers, you will see a decrease in your company’s value.
Sellers are often inflexible in their asking price. They may quickly turn down offers from potential buyers without fulling considering the sale potential. If a seller is unrealistic in their asking price, they will most likely turn down every prospective offer. This can lead to months or even years of listing a business. This costs the seller valuable time and money.
5) Offer Details
An inexperienced attorney may spend weeks reviewing and analyzing every single detail of the purchase offer. They may need additional time to research industry specific terms or calculations. In the meantime, the buyer is getting frustrated waiting. He may choose to withdraw his offer and move on to another sale.
Most general business brokers would let these common complications hinder a sale. However, an industry specialized business broker would have the experience to anticipate these common issues. In the event that they do occur, they would use their industry specific knowledge and experience to quickly resolve and move on. A transportation business broker can:
- Provide an accurate, up to date valuation of your business and its inventory
- Screen for qualified buyers
- Require confidentiality agreements and develop procedures that will allow for a broad exposure while maintaining confidentiality
- Provide realistic compromises to inflexible buyers and sellers
- Use extensive knowledge and experience to quickly review purchase offers
If you are selling your transportation business, you can expect a number of complications to arise during the sale. However, by hiring a transportation business broker that has knowledge specific to your industry, you will ensure that issues are resolved quickly and the sale continues.