The Pros and Cons of Investing in a $12.5M Refrigerated Trucking Company

In this episode of Acquisitions Anonymous, the hosts talk about a $12.5 million deal for a refrigerated trucking company. They discuss the challenges and opportunities of this purchase, touching on financing issues, how the business operates, and its market position.

The listing

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Business Deal Overview

This deal involves buying a refrigerated trucking company for $12.5 million. The business specializes in transporting perishable goods with a mix of company-owned trucks and owner-operators. The fleet's flexibility is a standout feature.

Business Market Analysis

Refrigerated trucking is crucial for moving perishable goods. This market needs reliable, on-time deliveries, which the company aims to provide with its mixed fleet. However, the hosts mention that the industry is highly competitive and affected by fluctuating commodity prices, impacting profitability. The company’s revenue in 2021 was $11.5 million, but there's no data for 2022 and 2023, making it hard to gauge recent performance.

Financial Analysis

Revenue Stream: The company makes money by using its refrigerated trucks for transporting goods, with both company-owned and owner-operator services.

Cost Structure: Major costs include maintaining the fleet, fuel, driver salaries, and paying owner-operators. The hosts emphasize that managing these costs is essential for staying profitable. In 2021, the company's EBITDA was $2.4 million.

SBA Loan Material: Financing this deal with a traditional SBA loan is tough due to its size and the specialized nature of the business. This requires specialized lenders, making the financing process more complex. Heather Endresen notes that an inter-creditor agreement is usually needed, adding to the complexity.

Pros and Cons

Pros:

• Flexible fleet with both company-owned and owner-operator trucks.
• Quick scaling of operations using owner-operators.
• Established place in the refrigerated trucking industry.

Cons:

• Complicated financing involving specialized lenders.
• Operational risks like maintaining the fleet and relying on owner-operators.
• High sensitivity to market and commodity price changes.

Who Should Buy This Deal?

This deal is a good fit for buyers with logistics and transportation experience, especially those who understand managing a refrigerated fleet. It's also suitable for investors with access to specialized financing and who are comfortable with operational risks.

Final Thoughts

The mix of company-owned trucks and owner-operators offers flexibility but also brings operational risks. Bill D’Alessandro mentions that while owner-operators can scale quickly, they might not be as reliable as a company-owned fleet.