Part Two: Advice on selling your privately held logistics/transportation company
Many owners choose to sell their businesses rather than pass them on. Fortunately, this is an opportune time as investors are sitting on a lot of capital and logistics and transportation businesses are looking to expand through acquisitions. But selling a family-owned or closely-held logistics and transportation company can be a fulltime job in itself. Part two of this article continues to detail the best practices when looking to sell your logistics/transportation company.
Other preparatory considerations. If your business does not have a board of independent, outside directors, think about creating one. “The oversight provides a back stop for the family,” Mr. Golden said. Also, invest in the best technology. Not only will it help you run your business better, but it will have a value when it comes time to sell – unlike free downloads from the Internet.
Should the No. 1 priority be getting the most money at the close? That might be the goal at first, but as the process evolves other priorities are likely to push maximum cash out down the list.
In the family business often it’s more important to make sure relatives and friends keep their jobs, to close the deal relatively quickly, and to sell to a buyer with similar values or who is not a competitor. “I can’t think of a deal in recent times where the high bidder got the company,” Mr Golden said. “One of the reasons someone is the high bidder is to overcome aspects of the offer that are less attractive.”
Stock sale or asset sale? There are many different legal structures for selling a business (a sale of stock or assets, a merger, or recapitalisation) If your company has a choice, which route is best? The answer depends on the requirements of the buyer and the seller. Is the goal to minimize taxes (generally, a seller’s goal) or is it to receive a step-up in basis in the target company’s assets (generally, a buyer’s goals)?
The owner’s prominence. A business where the owner is A level and surrounding personnel are C level is unattractive to buyers. Important business relationships should be with several key employees, not just with the owner. When a dominant owner’s tenure ends, the company’s business relationships might end, too, leaving the new owner with nothing. Building a diversified customer base is critical if the strength of the company is going to be more than just the owner’s relationships.
Responding to the unsolicited offer. Do you want to sell to the first offer or test the market? This is where the investment banker plays a critical role. Closing a sale can take 6-9 months. During that time “you need to keep doing what you were doing, which is to run your business,” Mr. Golden pointed out. And that’s possible only if someone else – the investment banker – is carrying the ball during the selling process. The No. 1 reason deals fall through is that the company has missed earnings during the vetting period.
The emotion factor. When the seller and buyer are communicating directly emotions can run high. It’s critical to have an intermediary who will process the information to help the client better understand the transaction and make the right decision.
Michael D. Golden, organized a panel at the recent Georgia Logistics Summit that addressed critical issues to consider when selling a company. Joining Michael on the panel were Rob Adams, managing director, EVE Partners, LLC; Vince Eget, partner, Bennett Thrasher, LLP; and Heidi Green, managing partner, Perdue Partners, LLC.