Most of us won’t argue with the statement ‘mother knows best’, but when it comes to selling your fleet mommy dearest might not have all the answers. In fact, few people know all there is to know about selling a fleet business. There will always be more to learn, and the industry and market will continue to evolve, but when it comes to selling a fleet there are a few essential concepts every owner should keep in mind.
Here are 30 principles that your mother never told you about selling your fleet.
- Selling a fleet is not a simple process. You can be sure of two things—it will take longer and be more complicated than you expected.
- Be prepared to make full representations and warranties about your fleet—even “unknown liabilities.”
- Selling is a specialized process—use expert lawyers, accountants and intermediaries experienced in the acquisition business.
- Know before negotiations the fair market value of your fleet.
- Price your fleet fairly—the range of purchase values is not large, probably ±10% in most cases.
- Equate it to comparable competitors—if your price is more than 150% of the best fleet in the industry you’re most likely being unrealistic.
- Provide a continuity of management if you want a good price—buyers have learned few entrepreneurs work harder after the sale.
- Understand profits are a negative not a plus—someone will have to pay those taxes when the time comes.
- Stay flexible—it takes two to tango during a sale so remember there is a time for rigid positions, but don’t overdo it.
- Be creative—there is a way around most logjams. Keep searching for alternatives until you find the right combination.
- Focus your time and energy on THE SALE—it is one of the biggest ones of your life after all.
- Don’t let the process drag on—wine improves with age, but deals definitely don’t.
- Keep your fleet healthy and growing throughout the selling process—if profits drop so does your price and your negotiation strength.
- Don’t be too generous with other people’s money—if you didn’t give big bonuses, options and perks in the past don’t start now.
- Use an intermediary such as a lawyer, accountant, and/or broker for negotiations, but don’t do it yourself. Does a surgeon operate on his own family?
- Keep it cool—emotion is no substitute for analytical judgement.
- It only takes one good buyer to make a good deal.
- Keep a positive attitude at all times because almost every lawyer and accountant starts a sentence with: “The problem is…”
- Don’t let the MBA’s wear you down—they thrive on statistics so for your own sanity feed them data three times a day.
- Work closely with your selling team—be open and transparent. This is not time for failing to disclose essential information.
- You can’t eat your cake (Subchapter S) and expect to get the same price as you would for a whole cake. Would you buy a cake with a slice missing?
- Be willing to give as well as take—it will surprise the hell out of your adversary, but don’t give away the entire store.
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Don't forget the five basic laws of economics:
- There is no such thing as a free lunch.
- The law of supply and demand always exists.
- The value of an asset is not its replacement cost. The value is its future discounted cash flow.
- Financial complexity is no substitute for economic common sense.
- Creative financing is in the eyes of the beholder, not the pocketbook of the seller.
- Real estate is rarely sold for what the seller thinks it’s worth, nor would the seller buy it for what he or she says it’s worth.
- Keep your options open until you achieve your key goals. Don’t say no until you have fully reviewed the offer - and don't burn any bridges. They can be expensive to rebuild.
- Always use expert financial negotiators—you only sell your fleet once. It could be expensive on-the-job training.
- Listen to your advisors, but make your own business decisions. It’s your fleet.
- Don’t count your money at the negotiation table. There will be plenty of time for that when the deal is done.
- There is no closing until the closing.
- Never look back.
