Selling a Commercial Moving Company

Where the money comes from

Revenue in this trade falls into a few kinds. There are the large one-time relocations, where a company moves a floor or a building and the job may run for weeks. There are the steady accounts, the property managers, leasing offices and corporate real estate departments that call every time a tenant moves in or out. There is the day-to-day work of furniture rearrangements, installing workstations and moving a few offices within a building. There is also the ancillary work, which includes crating for equipment, packing for labs and medical offices, data center moves, storage, disposal and recycling of old furniture, and project management billed as its own line.

Buyers like the ancillary work because it carries better margins than the truck and crew hours do, and because it deepens the customer relationship. A company that coordinates the whole move, from the walkthrough and floor plan to the labels on every workstation, becomes hard to replace. A company that only supplies trucks and laborers competes on price every time.

Expect a buyer to ask for revenue by customer for several years, split into project work and recurring account work, with margins by job type. They also look at how much of the business came from bids and how much came from repeat calls. Winning bids is a skill, and buyers want to know if that skill lives in a salesperson or in the owner.

Crews, crew leaders and the owner's role

A commercial move succeeds or fails on the crew. A good crew leader reads a floor plan, protects the elevator, keeps the building manager calm and finishes before the move window closes. These people are scarce, and buyers will ask how many you have, how long they have been with the company, what they are paid and whether they could run a job without you in the building.

The second layer is the pool of movers who work on busy days. Many commercial movers lean on seasonal or part-time labor in the summer and at the end of the quarter, when leases roll and companies relocate. A buyer will ask how that labor is hired and paid, whether the people are employees or contractors, and how workers' compensation is handled. Misclassifying a worker is expensive to fix, and rules vary by state and your attorney confirms what applies to your crews.

If you personally walk every job, write every estimate and take the calls from the property managers, a buyer will price in your absence. Our post on owner dependency covers how to move those tasks onto other people before you list.

Corporate accounts and concentration

Corporate relocation customers give a mover a steady flow. A property management company that places the same mover on every tenant turnover can provide many jobs a year, and a corporation with a facilities department may sign a master agreement with preferred rates. Buyers like those arrangements and read them closely. They want to see whether the agreement is in writing, how long it runs, whether it can be cancelled, whether it names your company or a person and whether it has a change-of-control clause.

Concentration is the other side. If a handful of accounts make up most of the revenue, the buyer will ask what happens if one of them puts the work out to bid or hires its own movers. Our post on customer concentration explains how buyers think about it. Project work also comes in lumps. A large move may make one year look better than the next, so buyers normalize the numbers over several years and discount the lumpiest.

Equipment, storage and the building

The fleet is a large part of the asset base. Buyers will want a list of trucks with year, mileage, condition, loan balance and who owns each one, along with liftgates, dollies, pads, carts, panel trucks for smaller jobs, crating tools and specialty equipment for moving safes, server racks, lab equipment or art. Deferred maintenance, aging trucks or a fleet owned by the seller personally and leased to the company need to be sorted before a buyer sees them.

Storage matters if you have it. A warehouse with racking, climate control and a clean inventory system gives the company a second line of revenue and a place to stage projects. Buyers will ask who owns the building. If the owner owns it personally, the sale of the business and the lease or sale of the building need to be handled together. See real estate attached to the business for the options. If the building is leased, the lease and the landlord's consent follow the usual path described in the lease is part of the deal.

Licenses, insurance and records

Moving companies that cross state lines or move household goods may need operating authority from federal and state regulators, and many states license local movers separately. A company that does only commercial work may fall under a lighter set of rules, though that varies. A buyer will ask for every registration, permit and insurance policy the company holds, in whose name, and whether it can move to a new owner. Rules vary by state and your attorney confirms what applies.

Insurance is a bigger topic here than in most trades. Cargo coverage, general liability, auto, workers' compensation and sometimes coverage for the damage a crew can do to a client's building are all central to the business. Buyers ask for loss runs, a record of claims and how you handled the large ones. A moving company with a clean claims record, a documented damage process and written safety rules is easier to place with a lender and an insurer.

Safety records and driver files will also be requested. Buyers expect drug and alcohol testing, driver qualification files and vehicle inspection logs where they apply. These records are tedious to build in a hurry, and they are easier to hand over if they have been kept up.

What tends to sink a sale

Moving deals fall apart over a few problems. The owner is the estimator, the salesperson and the closer, and the buyer cannot replace all three. A master agreement is held by one manager at the customer who has retired. Worker classification becomes a question during diligence. A claim shows up that was never reported. The trucks need replacing. Or the books count deposits on future moves as revenue before the work is done.

Confidentiality needs care here because customers and crew leaders both talk to each other. We market a business without naming it, and buyers sign a nondisclosure agreement before they see anything that identifies it. Our post on how we market a business confidentially explains the steps.

Getting ready

Start with the customers. Write down who your top accounts are, how long you have served them and what the agreement says. Build a crew roster that shows leaders, tenure and pay. Pull claims history for the past several years and write up how you handle damage. Get the fleet list, the maintenance log and the insurance policies into one folder. Separate project revenue from recurring revenue in the books.

Business Advisors of America builds a valuation from your own records, prepares the materials a buyer and lender will ask for and screens buyers before they see your customer list. Our page on selling a commercial moving company shows how we approach it, and a short call with us is the next step.

This article shares our opinion and general information. It is not legal or tax advice. Always speak with a licensed attorney for legal advice, and a qualified tax professional for tax questions, before you act.