Fleet M&A: Five signs to watch for

Jan. 20, 2015

As fleet owners, you all know how important highway signs are. Imagine trying to drive a big rig on a mountainous highway, in the dark, without any highway signs. You wouldn’t know what speeds were safe, where the curves are located, or even if the road was closed. 

As in driving, fleet owners need to pay attention to important M&A signs along the way as they steer their company into the future.

Some signs will be very evident. Others may require you to pay very close attention to yourself, your company, the economy and the market.

Five M&A signs to watch for:

Growing Economy – Full speed ahead!  Opportunities to boost sales through developing new markets or acquisition of existing markets usually develop during strong economic periods.  Either will enhance the value of your fleet. This can also be the best time to sell your fleet, because values will be higher and your fleet will be most attractive to buyers.

Aging, Declining Fleets – Stop and Look!  These may represent acquisition opportunities that could provide easy entry into a new market, and the opportunity to increase efficiencies of the aging fleet, through the addition of new equipment, reduced staffing, etc.

Dramatic Cost Increases/Decreases – Beware and slow down!  Diesel prices are down across the nation. Lower fuel costs should mean lower operating costs and the opportunity to boost your bottom line and value – if managed properly.  Savvy owners often use unplanned savings to address strategic issues that can provide long-term growth, to pay for new equipment or reduce debt. Also beware of dramatic increases in your costs created by either internal or external issues.  These too impact your profitability and ultimately company value.

Driver Shortages – Danger Ahead!  You can have amazing equipment and more shipments than you can haul, but if you don’t have qualified, safe drivers your company’s future and value is at stake.  Potential buyers are more attracted to fleets with high driver retention, great safety records, and well developed programs to attract and retain new, safe drivers. If you do not see this sign, it will impact your ability to grow and your fleet’s value.

Your Health – Slow down!  Be honest. You are not getting any younger.  Even if you are younger and healthy, you should always have an exit strategy in place that can be used should you be involved in an accident or you experience serious health issue. This ensures your family and key employees are protected and will ensure the company continues to operate smoothly even if you can’t be there every day.  This also boosts fleet value, because it demonstrates to potential investors that the fleet can continue to be successful, even if you aren’t there.

Watching for important M&A highway signs will help guide your fleet down the road to increased value and, just like regular highway signs, they can help you avoid potential hazards that could decrease the value of your fleet.

About the Author

John Sloan | Vice Chairman

John Sloan is the Vice Chairman of Allegiance Capital, a middle-market investment bank that works with business owners to help them sell or raise capital. 

John has more than three decades of C-level experience in investment banking and private equity.  He has personally executed transactions with fleet owners and understands the unique needs of the trucking industry. 

During his career, John has raised more than $1 billion in debt and equity.  He is an expert in all aspects of investment banking and has evaluated and negotiated the acquisition of more than 30 companies in: energy, construction, retail, telecom, environmental, logistics and manufacturing, with an aggregate value in excess of $7 billion.

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