Latest / The Buyer & Seller Podcast with Fexingo: Business Brokers, Exits, and Private Sales Explained / How a Trucking Fleet Sold at 6 Times EBITDA
Transcript
- Lucas: So there's this regional trucking fleet in the Midwest — about forty tractors, sixty trailers — and it just sold for six times EBITDA. Which, if you've been listening to this show, is a number that makes a SaaS founder wince. But in the asset-heavy world of trucking, it's not just normal, it's often the ceiling. Luna: Six times EBITDA for a business with real hard assets and actual revenue? That feels low. I mean, we had a dental lab go at eighteen times a few episodes back. Lucas: Right, and the lab had essentially no equipment that couldn't be replaced in a week. But a trucking fleet — that's forty engines, forty drivers, forty sets of tires that wear out every few months. The buyer isn't buying a lifestyle business, they're buying a machine that needs constant feeding. Luna: So what was the actual deal? Let's get into the numbers. Lucas: The fleet was running about two point five million in EBITDA on roughly nine million in revenue. The seller was asking seven times, but the buyer — a larger logistics firm from two states over — came in at six and a half, and they settled on six. That's a purchase price of fifteen million dollars. Luna: And fifteen million for forty trucks — that's about three seventy-five per truck, which sounds like you're buying the iron, not the business. Lucas: Exactly. And that's the crux. The buyer, in this case, was mostly interested in the operating authority and the customer contracts, not the rolling stock. They already have their own fleet, but they wanted to expand in that region without starting from zero. Luna: So they paid fifteen million for a customer list and a license? That seems steep for that. Lucas: Well, it's the difference between buying a route and building one. If they'd tried to win those shippers from scratch, they'd be looking at two years of sales calls and a lot of no-shows. Here, they inherit relationships — but they also inherit the risk that those customers are sticky enough to stay. Luna: And that's where the multiple gets capped, right? Because if those customers leave, you're just stuck with a bunch of trucks. Lucas: Precisely. The seller's top three customers were forty percent of revenue, and two of those contracts were up for renewal within twelve months. That's a huge red flag for any buyer, because in trucking, switching costs are actually pretty low. A shipper can move to a competing carrier in a matter of weeks. Luna: So the buyer sees that concentration and thinks, I'm not paying a premium for revenue that might not stick around. Lucas: Right. And that's before you factor in the equipment. The average age of those tractors was about five years. That's not ancient by industry standards, but it means the buyer is looking at a capital expenditure cycle that's coming due. The tires, the brakes, the emissions systems — that eats into the cash flow you thought you were buying. Luna: So the EBITDA multiple has to compensate for the fact that the buyer will have to spend money just to keep the lights on. Lucas: Exactly. And here's a subtle point — the seller was running the trucks on a mix of company drivers and owner-operators. The owner-operators are essentially independent contractors, so their revenue flows through, but their costs aren't fully in the EBITDA. That inflates the margin on paper, but a buyer knows they can't squeeze those costs easily. Luna: So the addbacks weren't as clean as they looked. What did the broker say was the biggest single factor? Lucas: The broker pointed to two things. First, the customer concentration I mentioned. Second, the fact that the fleet was dependent on a single fuel contract with a regional provider that was below market — and that contract was tied to the seller personally, not to the business. So when the owner leaves, that discount goes away. Luna: That's a classic owner-dependence issue. So the buyer is essentially paying for a business that loses its competitive advantage the day the seller walks. Lucas: Right. And that's why they landed at six instead of seven. But here's the thing — even six might have been generous. The buyer's own cost of capital is around nine percent right now, and when you run that against the cash flow, they need a multiple that gives them a decent return on invested capital. Six times EBITDA is about what they could justify. Luna: So the multiple isn't just about the business, it's about the buyer's financing costs. That's a distinction that often gets lost. Lucas: Yes. And that's a big theme in this deal. The buyer could have borrowed a lot at lower rates a couple of years ago, but in August 2026, with the Fed having kept rates elevated through the first half of the year, the cost of capital forces discipline. They can't afford to overpay on a risky asset. Luna: So how did the seller prepare for the sale? Did they do anything right? Lucas: Interestingly, the seller had done a lot right. They had clean financials for three years, they had a maintenance log that was meticulous, and they had a few long-term contracts with a couple of anchor shippers that were set to renew after the sale. That gave the buyer some comfort that the revenue wasn't entirely transient. Luna: But those anchor contracts weren't enough to move the multiple higher. Lucas: No. Because the buyer knew that those contracts were with the seller's personal relationships, not with the company. So they factored in a retention risk — maybe they'd keep seventy percent of the revenue, maybe not. That uncertainty is what keeps a multiple in the single digits. Luna: So what would have gotten them a higher multiple? If they'd had longer contracts, less concentration, maybe a younger fleet? Lucas: All of those. If the top three customers had been, say, twenty percent of revenue and the contracts had three years left, this could have been an eight or nine times deal. Even in trucking. But the seller had deferred some maintenance, which is common, and that worried the buyer too. They wanted a discount for the risk. Luna: So it's a classic risk-adjusted valuation. And the buyer ended up using a mix of cash and seller financing, right? Lucas: Yes — the seller financed about twenty percent of the deal, two million dollars, over five years at a seven percent note. That helped bridge the gap on price. The seller got their six times, and the buyer reduced their upfront capital and cushioned the retention risk, since the note is tied to the business's future performance. Luna: That's a good example of how seller financing can make a deal happen at a multiple that might otherwise be lower. Lucas: Exactly. In fact, if the seller hadn't been willing to take that note, the buyer might have pushed for five and a half. The willingness to share risk is often what holds a deal together at a decent number. Luna: So what's the takeaway for someone listening who owns a trucking business or any asset-heavy operation? What should they do before they list? Lucas: The biggest thing is to reduce customer concentration and extend contract lengths. That's easier said than done, but even moving one big customer from a year-to-year deal to a three-year deal can change the conversation. The other thing is to be honest about maintenance — don't defer it, because a buyer will notice and discount accordingly. Luna: And also, don't be personally tied to the key contracts or the fuel deal. That kills multiples. Lucas: Absolutely. If you're the business, you need to be replaceable. That's the single biggest factor in moving from a six to an eight. The buyer needs to believe the business can run without you — and without your relationships. Luna: That's a lesson that applies way beyond trucking, honestly. I'm thinking of that bookkeeping firm we covered that sold at four times — same issue. Lucas: Exactly. Owner dependence is the silent killer of multiples. But what's interesting here is that even with those issues, the seller got a fair price — they didn't get rich, but they got out with fifteen million and a note. And the buyer got a platform to grow from. It's a deal that works for both sides. Luna: And that's really the goal in private sales, right? Not just to maximize the multiple, but to get a deal that closes and sets everyone up for the future. Lucas: Right. And on that note, we've been talking about deal structure and multiples — and it's a good moment to mention something about this show. We keep it ad-free, and that's a choice we've made deliberately. We want these conversations to stand on their own, without a sponsor pushing a product in the middle of a deal breakdown. Luna: Yeah, that's a big part of why we sound like we're just talking. And honestly, if you've gotten something out of these episodes — maybe a better understanding of how to value your own business — the best way to keep that going is to support the show directly. Lucas: If you'd like to do that, it's buy me a coffee dot com slash fexingo. That's the whole ask. No tiers, no perks, just knowing that the pod stays independent. Luna: And it genuinely helps us keep doing these deep dives. So, back to the trucking deal — after the sale, the seller actually stayed on for a six-month transition. That's a common seller financing condition. Lucas: Yes. And that transition period is crucial in asset-heavy businesses, because the buyer needs to learn the routes, the drivers, the customers. If the seller had just left on day one, the retention risk would have been even higher. So they paid the seller a monthly consulting fee during that period, which is typical. Luna: So the seller got paid twice — the purchase price and consulting fees. Not bad. Lucas: It's a fair outcome. And it shows that even in a low-multiple deal, there are ways to make the exit work financially and practically. The seller didn't just vanish, they helped the business land safely. Luna: So for anyone thinking about selling an asset-heavy business, what's the one big number to keep in mind? Lucas: I'd say it's not the multiple — it's the buyer's cost of capital and the retention risk. If you can mitigate those two, you can push your multiple up a point or two. And that's worth a lot when you're talking about millions of dollars. Luna: That's a great place to leave it. Next time, maybe we'll look at how a buyer evaluates a seller's customer contracts in more detail. Lucas: That's a good one. For now, if you want to support the show, the link is buy me a coffee dot com slash fexingo. We'll be back with another deal breakdown soon.