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Part 2: Selling a Limousine Business 101

Last updated on February 7, 2011 by Sozo Staff

The vast majority of limousine business owners who approach The Tenney Group about a possible sale are going through the process for the first time. Successful limousine business sales begin with education. As limousine business owners become more educated about their future business sale, they increase their chances of a successful outcome exponentially. The following bullet points address some of the basics of what The Tenney Group likes to call “Selling a Limousine Business 101.” Part 2 of 4.

5. How long will it take to sell my limousine business?

For small businesses (below $2 million in annual sales) the average sale time across all industries is typically 9-12 months. Over the past 24 months, The Tenney Group’s average sale time for all of our transportation business sales has been 4.5 months.

6. What is recasting?

Merger and acquisition specialists and business brokers recast financials for business owners to help them understand what to expect in the selling market. Recasting, or normalizing, a company’s financial statements demonstrates the true financial benefit of ownership and allows investors to meaningfully compare businesses for sale with other investment opportunities. The process of recasting addresses excessive and discretionary expenses, nonrecurring revenues and expenses, as well as owner benefits (salary, perks, personal loans, etc.) in order to assess the limousine business’ cash flow and future earning capacity.

7. The role of seller financing

Seller financing involves a seller allowing the buyer to pay a portion of the transaction over time. Seller financing is a critical component of deal making, even when it comprises a marginal percentage of the sale price. When a seller refuses to consider seller financing as part of deal structure, he shrinks his buying pool by 90% and gives every remaining buyer the impression that something is wrong with the business. To stabilize their investment, the SBA commonly requires a marginal percentage of seller financing to secure funding for a business purchase. Your willingness to work with the buyer and lender will demonstrate confidence in your business’ ability to continue on without your involvement. It will also allow the sale price to become more favorable to you. The Tenney Group reminds our clients that the risks of seller financing are no less real than the risk of every day business. It is simple. You are the bank. Seller financing is available based on the buyer’s qualifications. If the buyer does not have industry related experience or if you do not trust the buyer, you may want to focus your attention on another buyer.

8. Can your limousine business be sold?

According to the national business brokerage community, only 10-20% of all businesses listed for sale will actually be sold. This is an embarrassing statistic. The reason general business brokers struggle to get deals done in our industry is because their businesses are not built to serve the needs of limousine business owners. In all of The Tenney Group’s business sales over the past 24 months, the average distance between the buyers and sellers was 400 miles. The best buyer for your business may not consider themselves to be a “buyer.” However, because of the strategic benefits available to them through acquiring your business, they may be able to justify paying you the most money—whether they understand it now or not. If a marketing campaign is locally focused or requires an active buyer to find your business and identify the unique financial benefits of acquiring your business on their own, there is a very low probability that you will get connected to the right buyer and that a deal will take place. The Tenney Group successfully sells over 85% of all the listings we accept, and we are constantly improving our success rate. Our experience demonstrates that whether your business is profitable or not, whether the economy is strong of in the tank, your business is valuable and sellable when presented correctly to the right buyer.

Filed Under: Transportation

Additional Articles

Portrait of an Ideal Seller by the Expert Transportation Brokers


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