Buying a trucking company: the eleven things that actually kill the deal

Trucking looks simple from the outside: trucks, drivers, freight, margin. It is one of the easiest industries to buy badly, because almost every real risk sits somewhere other than the income statement. Here is the list we work through on a buy-side trucking engagement before anyone says the word "multiple."

1. Fleet age — and whether the whole cycle lands at once

Average fleet age tells you almost nothing. The distribution tells you everything. A fleet averaging 450,000 miles could be evenly spread across a healthy replacement cycle, or it could be sixty percent of the tractors past 500,000 miles and due together. One of those is a business. The other is a multi-million dollar capital call disguised as a business.

Ask for the unit-level schedule: year, make, mileage, engine hours, last major service, lien holder and payoff. If it does not exist, that is itself a finding.

2. Deferred maintenance

The debt nobody puts on the balance sheet. Pull maintenance spend per unit per mile for five years and watch what happens as the sale approached. Spend that falls in the twelve months before a sale is not efficiency. It is a bill transferred to you.

3. Customer concentration

When one customer carries a big share of revenue, you are not just buying a company, you are buying a relationship that was never yours, held by an owner who is leaving. That is not automatically a no. It changes the price, the structure and what the seller stays on the hook for — and it has to be priced before you sign, not discovered after.

Get revenue by customer for three years, and by lane if it is dedicated. Look for the customer that is growing as a share — that is the concentration you will have at close, not the one in the CIM.

4. Whether the receivables are already spoken for

If the company factors its invoices, the A/R is encumbered and the working capital you thought you were buying belongs to the factor. Read the factoring agreement in full: the rate, the reserve, the recourse terms, the notice period and the termination fee. Factoring facilities are frequently the hardest thing to unwind in the whole transaction.

And ask the obvious question. A company earning a genuinely strong margin does not need to sell its invoices at a discount. Factoring alongside a claimed high margin is one of the cleanest contradictions in this industry.

5. Loss runs and the insurance reprice

Get five years of loss runs from the carrier, not a summary from the seller. Look for open claims, reserved amounts and anything involving injury or fatality. Then get the current policy and the renewal date.

Insurance in trucking can reprice violently after a bad year, and a buyer who models the seller's historical premium into year one is modelling a number that may no longer be available to them at any price.

6. Safety scores and authority

Pull the FMCSA record independently. CSA BASIC scores, inspection and out-of-service rates, crash history, and the status and age of the operating authority. A poor safety profile raises insurance, loses shippers and limits who will broker to you — and in an asset purchase, the question of whether the authority transfers at all is a legal one that needs answering early.

7. Driver turnover

Ask for terminations and hires by month for two years. High churn is not an HR problem to fix after close. It tells you what it is like to work there, what your recruiting cost will really be, and whether the trucks you just bought will have anyone in them. We passed on a deal where the company terminated 149 drivers in five months. Nothing else on the page mattered after that.

8. Owner-operators versus company drivers

A fleet running on owner-operators has a different cost structure, a different risk profile and a real classification exposure. Understand which model you are buying, whether the contracts are current, and what happens to those relationships when the person who recruited them leaves.

9. Equipment liens and change-of-control

Every equipment note has terms, and many have a change-of-control clause requiring lender consent on a sale. We have watched a consent issue on a single equipment lender hold up an entire closing. Run UCC searches, build a lien schedule tied to the unit schedule, and get consents started early — not the week before close.

10. Rate exposure and lane quality

Contract freight versus spot exposure, and how the rates were actually earned. A carrier whose recent numbers were made in a strong rate environment is not the same business at a soft rate, and the last two years have been an education in exactly that. Model the downside rate, not the trailing one.

11. Whether the owner is the business

In most lower-middle-market carriers, one person holds the top customer relationships, sets the pricing, knows which drivers to keep and handles the problems. If that person is leaving at close, you are not buying a company. You are buying its equipment and its liabilities, and hoping.

The fix is structural: a real transition period, an earn-out that keeps the seller invested in the handover, key-customer contracts assigned and reconfirmed, and a rollover equity piece where the seller will take one. If the seller refuses all of it while insisting the business runs itself — believe the refusal, not the claim.

What we do with all of it

Every one of the above feeds the same three tests. Does the structure still clear 1.5x debt service coverage on conservative numbers? Does it survive a 20% revenue drop the month after close? Is customer concentration measured and priced? If the answer to any of those is no, the structure gets rebuilt.

Read the case files to see how that plays out on real deals, or send us a target.