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Relevant news and topics for the FedEx route market

Get Your FedEx Route Business Ready To Sell

So, you have decided it’s time to sell your company. While that decision can be difficult to make as it means letting go of the business you built, it is only the first step in the process to ensure your transaction goes smoothly.  Below, we have listed a few key items that we believe can help maximize value for your business.

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Timing of Transaction - FedEx

Timing the sale of your business is key. Given that all transactions are ultimately approved by FedEx, there is one time of the year where approvals grind to a halt. Peak. Given how busy operations get during peak season, FedEx unofficially puts on hold any route transfers from essentially late October through December. In our experience, it is nearly impossible for FedEx to approve a route transfer in the middle of peak. With it being the busiest time of the year, it simply is not the ideal time for FedEx to allocate time to onboarding a new route operator. At Black Iron Advisers, we recommend that if you want to sell in a particular year, the earlier you can start the process in a particular year, the better. However, this doesn't mean you can't be getting your business ready to sell, speaking with potential buyers, or agreeing to a deal during peak. It simply means the official sale of your business won't occur until January.

People

Another item to think about is your labor force. Given selling a business can be a distraction to the owner, it is best to start the process when you feel you have a reasonably seasoned team. With an experienced team, this helps buyers get more comfortable acquiring the business. Undoubtedly, buyers will expect some level of transition help from sellers to learn about the business. While negotiable, sellers do typically provide 30-60 days of transition help to new buyers. After that though, the buyer is on his own with your former employees. As such, the stronger your team is, the more comfortable the buyer becomes and ultimately the higher the price your company will be worth.

Assets

Similar to people, trucks are also a key aspect of the business. While we would not recommend going out and buying all new trucks, you also certainly do not want your entire fleet to be on its last legs. As a seller, you must be able look at your business from a buyer’s perspective. A fleet that is old with significant deferred maintenance will be certainly less attractive (and worth less) than a properly taken care of fleet both mechanically and visually.

Timing of Transaction - Financials 

While there is a timing component for FedEx approvals, there is also a timing component with your financials. As with most businesses, ones that show growing or steady profits will appeal more to buyers than companies who showed significant declines in prior years. If declines are driven by one-time costs like large weather disruptions (think hurricanes, tornados, etc.) or road construction that significantly alters an area forcing business/residential relocation, it might make sense for you to operate the business for another year to demonstrate the one-time nature of the one off year so that you can maximize value of your business.