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2 Big Problems Common in Limo Business Sales

Last updated on November 15, 2011 by Sozo Staff

At first glance, lining up a buyer for a valuable chauffeur business seems like an easy enough task. But sometimes the value of a good business gets lost in translation. Every industry has quirks that can interfere with the sales process. In the case of a limo business for sale, calculating goodwill and securing financing present challenges that can prevent a promising deal from taking place. Fortunately, these obstacles can be mitigated with the help of an industry authority.

Calculating Goodwill

Determining the value of a business is a lot more complex than simply adding up physical assets and subtracting liabilities. In addition to vehicles, property, and cash, all companies possess some amount of intangible assets – collectively known as goodwill. Intangibles may include a recognizable name, a history of good service, longstanding customer contracts, or a coveted market. Each of these items has the potential to raise value significantly. But because it is difficult to calculate the amount by which goodwill will raise value, the concept is often misunderstood by sellers and buyers alike.

Most limo businesses have few assets other than cars and motor coaches, making goodwill particularly critical in determining a fair asking price. An industry transaction expert can be especially helpful in figuring out how to determine the value of a limo company and, later, expressing that value to potential buyers.

Securing Financing

With minor startup costs and relatively steady demand, the limo industry can offer lucrative rewards to the right investors. But those rewards are not always clearly visible to lenders. Banks, private investors, and other financing sources frequently misunderstand the limo industry, viewing it as a fragmented luxury market sensitive to economic whims – and therefore a risky investment.

Whether you are buying a limo business, selling a limo business, or expanding an already successful company, raising capital is an absolute necessity. Unless you have a money tree growing in your backyard, you’re going to need assistance. Seller financing can help make a purchase more feasible for a buyer, but an outside lender will still likely be required.

Again, having an industry authority on your side can provide a much-needed boost when negotiating with lenders, from local banks to the small business administration. An experienced professional has the power to stabilize an ownership transfer by giving lenders confidence about the industry outlook and your limo business for sale.

Filed Under: Transportation

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