I get a lot of questions about whether it’s a good time to sell, usually from trucking company owners who are “seller-curious” and want an opinion on whether they can strike it rich.

The fact is, deals that produce the best returns for the seller — both financially and personally — require a tremendous amount of preparation. You have to be ready to go when the time is right, and that timing can change on a dime.

In the spring of 2022, Left Lane Associates was hired to sell a large freight broker. We identified 457 qualified prospects and 85 responded, including 23 Expressions of Interest (EOI) and seven Letters of Intent (LOI). The deal closed in 90 days for 26% above the appraised value.

Fast-forward one year. A seller with similar top-line sales and EBITDA produced interest from 19 potential buyers, six EOIs, and no LOIs.

I don’t know if last year was a freight recession or a freight rebalancing, but the pain was reflected in the M&A space.

First-time buyers, companies relying on financing and financial sponsors weren’t open for business. Sellers’ numbers dropped rapidly from when LOIs were signed to when due diligence was done. It was hard to get alignment on valuations and close deals efficiently. On average, it took 133 days to close last year versus 91 days in 2021.

Looking at M&A in 2024, the good news is that Covid-years numbers are officially irrelevant. The bad news — or the challenge, anyway — is that buyers want more certainty out of the numbers they do see.

Year-end numbers not enough

Net income is not a 100% accurate indication of financial performance. During due diligence, a quality of earnings report is the new norm. Sellers who can’t or won’t produce monthly rolling numbers will be hung out to dry.

Buyers also want an accredited third party to dive deeper into a seller’s finances before they write a cheque. Surprisingly, cash on close rose to 76% in 2023, up from 68% in 2021. Sounds to me like buyers were dulling the pain of lower multipliers.

Heating up 

Last year, sellers were in short supply. Unless they were forced to exit, plummeting earnings had carriers sitting on the sidelines until business returned to normal.

With the freight economy in a more familiar pattern, the million-dollar question — literally — is what will push high-quality sellers into the market?

Some fear the gig economy. Most are fed up with the government, slashed rates, and a lack of qualified drivers. They’re all tired.

And my phone is heating up with calls from my carrier pals.

Gig economy impact 

Speaking of the gig economy, I’m hearing from more carriers that want to buy a Driver Inc. fleet. They’re smart enough to know that integrating gig workers into their existing fleet is a recipe for disaster. They also know they need to pivot to find new sources of drivers.

The recent filing for creditor protection by the Pride Group is company-specific, not industry-specific. But it reflects the challenges gig fleets are having. Many are crippled by interest rates and poor balance sheets. Pride isn’t the only Driver Inc. fleet to close its doors recently.

Driver Inc. fleets are ripe for the picking and could quietly drive up M&A activity. I say “quietly” because I doubt these deals will ever get announced.

Access to capital

I was having trouble getting bankers to go on the record for this column, so I reached out to my pal and customer, Dan Leslie, president of Triton Assets.

Dan switched to trucking after a stellar 25-year financial services career. Asked about Bay Street’s appetite to fuel trucking M&A, Dan thinks Canadian banks will continue to say they’re open for business but take a more cautious approach on a deal-by-deal basis. He also says the private credit market can be a credible alternative when flexibility and speed are important to corporate borrowers.

Well-structured deals between good companies will get done. Amen to that.