When the time comes to list your transportation business for sale, the bottom line in its appeal to a buyer will probably be cash flow. Your ideal buyer may want to replace a full-time income or to make reinvestments for long-term financial gain; either way, they’ll need assurance that they will make a financial profit. When transportation business owners want to increase cash flow with buyers in view, they can increase the possibilities of a profitable sale.
When selling is not in view, it makes sense for business owners to lower their net profit, for the simple reason of lowering their taxable income. Since buyers look for earnings, they need to be able to find it readily available. Particularly first-time buyers will need to be able to see obvious cash flow from recast financial statements. We’re not suggesting that you “cook the books,” but rather that you hire a business broker to recast your financials in order to showcase your true earnings—something your tax preparations will probably not show. Industry-specific brokers can even cast your cash flow into a model that demonstrates strategic benefits available to strategic buyers looking for long-term profitability.
Even though cash flow is a significant factor in being able to sell your transportation business, it isn’t the main element in determining your business’s value. Getting a transportation industry valuation will help you come up with a reasonable sale price will probably mean selling it for more than you would guess, based on cash flow alone. Other aspects of the equation include location, employees, reputation, competitors, and customers. Those hard-to-measure characteristics are significant factors in your business’s success. A transportation business broker has a way to include those details in a professional appraisal of your transportation business.
Even though buyers are certainly concerned with cash flow, your business doesn’t have to be absolutely booming in order to get it to sell. Some buyers are certainly interested in a quick profit, but others are more concerned with the other benefits of owning a transportation business: the independence that comes with business ownership and the company resources that will allow them to grow the business.
How significant cash flow will be to a particular buyer is virtually unpredictable; however, sellers can increase their chances of a favorable sale by targeting those buyers who will achieve their goals by buying their businesses. Sometimes, connecting with those ideal buyers can be difficult without an intermediary who’s knowledgeable within the transportation industry. Business brokers have the decades of experience as well as extensive databases with industry contacts likely to turn up buyers who will find your business exactly what they’ve been looking for.
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