I’m looking to buy an established business and saw a few trucking companies for sale and was wondering if anyone has an experience/ideas/input/etc related to if this is a good business to get into.
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If you´re Canadian, there will be a few of those up for sale very, very soon, so I think you´re literally on the right track here :)
It's hard to make money in trucking. There's little opportunity for differentiation, competition is always strong, the equipment is expensive, and especially now, there's a lot of pressure on everybody to try to manage their freight spend. Trucking means getting squeezed from every direction in the value chain, on everything, all the time.
Doesn't mean it's impossible. It really depends on the routes. Like any other capital-intensive business, it's an asset utilization game, and some locations/networks are better set up for efficiency than others.
If you're looking to buy a trucking business, as you go through the diligence process, two words should keep you up at night:
"deferred maintenance."
Logistics is a good place to be. Trucking not so much, multi-modal is better. The only real place in the trucking industry where small scale can still thrive is in the specialty hauling game. Has low utilization, buy has insanely high margins if you don't need to do significant infastrucutre rerouting. That sutff is paid for by the clients but it takes an insane amount of collabration and planning to get it done right.
I'd recommend starting with the relevant episodes of Odd Lots. My vibe is no, but you may think differently.
of course its a good space. I'd personally prefer to buy a last mile delivery service.
how much do they want, probably 2x what it is worth in reality right? whats the SDE? EBITDA etc?
Very cyclical. Good times for the industry at the moment, but by the time you buy, the music may have stopped.
The highs will be high and the lows will be low.
I have a small circle who actually runs/used to run a trucking business (security days).
The guy who ran it was a trucker himself who did it for 10+ years and went on his own. It’s well worth it, became a millionaire from his own business, and retired not long after. He went into security to get something to do, and to get out of the house.
Make sure you review and do your DD.
Trucking itself, I'm not so bullish on. However, some of the logistic tech spaces encircling shipping and trucking specifically are some up and coming spaces. There's a few companies in there worth checking into investing in if you can.
Depending on what kind of trucking it is (LTL / final mile / hazardous > a lot of other verticals), there could be an opportunity at the right price for a stellar business, but right now you're buying at or near the peak of the cycle, and most of your FCF is going to turning over your fleet no matter where you are in the cycle.
I'd probably recommend against if there are other businesses you're looking at it - trucking is just a hard, hard business for a lot of reasons.
No one has said unions!!
Go watch Irishmen on Netflix and get back to us.
Even though some time has passed since you asked, my advice is to take a close look at the operating numbers. I run a hauling business, and what helped me the most to increase my profit margin was switching to CurbWaste. They have a simple interface for drivers, and it got rid of unnecessary confirmation phone calls. It’s a good business if you have control over your data.
I wouldn't buy a trucking business. I'd seek businesses with more upside potential than trucking. Trucking seems fraught with liabilities and not huge profits.
If you're seeking to buy a transportation industry company, I think drones are going to take off. You could buy a company and experience serious growth. This is a better focus for you - what is a good growth industry or company.
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