When it comes time to retire, business owners need a succession plan for their company. Trucking companies can face unique obstacles to transitioning ownership. As a result, it is all the more reason for these business owners to prepare well in advance before executing a change of control transaction.

Selling to a strategic buyer


Many companies are family-owned and operated or closely held by a few shareholders. This can increase the challenges when one owner wants to retire, as he or she may need all parties to agree to a sale. However, selling to a strategic buyer who is interested in enhancing its own business model is a common practice for many businesses. At the same time, it’s important that the shareholders discuss their ultimate goals in order to evaluate if selling to a strategic buyer aligns with their expectations.

Selling to a financial buyer

This option essentially refers to selling a business to an individual or group of investors who are interested in the future expected earnings of the company. Generally speaking, financial buyers are not interested in retaining ownership of the company for a long period of time; instead, they would prefer to flip the business after a relatively short holding period in order to maximize the potential for greater returns.

Finding a successor


Instead of selling the company to a third party, business owners may want to turn the business over to another employee or relative. This ownership change also requires some strategic planning and careful consideration of the next company leader. By exploring this strategy early, the transition from one leader to the next can be successful.

Employee stock ownership plans


One option for trucking company owners is to sell their stock to an Employee Stock Ownership Plan (ESOP) as part of their succession planning strategy. This allows the company to transition into the hands of employees, while creating wealth and providing more retirement benefits and job security. As an alternative to selling to a third-party buyer, selling to an ESOP can also result in many tax advantages that can allow owners to defer the capital gains and increase their profit upon retirement. A sale to an ESOP will require the company to undergo a valuation from an outside advisor. Additionally, not all companies are suitable for an ESOP for a variety of reasons. For businesses with higher revenue potential, tax benefits can outweigh the costs.


ADDITIONAL RESOURCES