A Car Transport Company Grows Fast—Too Fast?
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If your customers are, "I'm moving to New Jersey and I need to ship my car to New Jersey and there's 10 of those and you build a route every time," I think there's zero equity value in this at all. The freight business and the trucking industry in the United States is in a massive upheaval right now.

Just for that reason alone, this thing scares me to death. Like there is no way you're just kind of hanging out and focusing on, as the broker says, strategic growth. This is not going to work that way. There's a lot of cost just to keep, to stay on the road in this business. So your cashflow is, I'm sure, a lot less than a million two at stated here. Hello, another episode of Acquisition Anonymous. We don't have a hundred percent beard anymore. And thumbs down on just the plus inventory amount.

Hey, Michael here. I have a secret to tell you. When we recorded this episode, we forgot to record the intro. So it's three weeks later and I was asked to come back and tell you about the intro for this episode. So I have good news. I don't remember anything about the deal except we've talked about some truck hauling and it was a ton of fun. So this episode turned out great. I promise. Listen in and see what we thought. Thanks for being here.

Hey everyone, it's Bill. And I want to tell you about maybe the most exciting sponsor we've had in a long time on the pod. It's called Capital Pad. And it is the thing that I wish existed when I started my journey of operating and investing in small businesses. So Capital Pad is a marketplace for acquisition entrepreneurs. That is people who want to buy a business and need capital to list their deals and solicit capital from other people who want to invest in

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So if this sounds like something that's appealing to you, if you want to buy a small business and need capital, or if you want to invest in small businesses, go check out CapitalPad.com and tell them that Acquisitions Anonymous sent you. Heather, are you recovered from doing our webinar? I am recovered from that. I'm also recovered from the new SOP. That was marked safe from the new SOP coming out a couple weeks ago. Yeah.

I felt like you and I are getting really good at doing those webinars. Yeah, they're fun. We just have our banter down. We both seem to get, we're very good at giving direct answers to things. And then it just showcases how much you know your stuff and how good you are at it. So anyway, it was great. Thank you. It was fun. Bill, did you enjoy listening? I, oh, I'm embarrassed to admit I did not come. I am not in the market for an SBA loan at the moment. No.

Well, speaking of SBA loans, let me pitch you guys on this. Not just one exclamation point, not just two exclamation points, but three exclamation points deal located in New Jersey. Can I pitch you on this? Thrill me, Michael. I can't wait. We've never done one of these. So I saw it when I was looking at listings this morning. I was like, this is really interesting. Also crazy.

So it's on BizBuySell. It's an automotive hauling transportation company and truck repair for sale, three exclamation points, in New Jersey. And then they have a picture here that looks to be a car hauler with a bunch of cars on it. And it's a big truck. I mean, is that how you would describe it, Bill? Yeah, it's a car hauler truck. It carries probably like double decker and carries probably, I don't know, 15 cars fully loaded. Yeah.

And this one appears to have Corvettes on it. So it's very New Jersey. Maybe the Corvettes come with the deal. I hope so. All right. So they are asking $4.7 million. Gross revenue is $7.2 million. Inventory is $1.5 million. EBITDA is $1.2 million. And they're paying rent of $7,200. They have $100,000 in furniture, fixtures, and equipment. And it was established in 2021.

So they're asking, it looks like three times. No, what is it? It's four times. It's four times 1.2 of EBITDA equals 4.8 million.

Oh, I already I already like this. I don't even know. I haven't read the listing. I already appreciate the broker on this listing. And the reason I appreciate this broker on the listing is they put an N.A. in cash flow and filled out only EBITDA, which I never see on BizBuySell. I never see that. And this guy or girl, whoever they are.

understands that buyers care about EBITDA. And I appreciate that. Good catch. I agree. I agree. So it's a truck repair and automotive hauling company. Have you guys ever used an automotive hauling company? I have. Yes. What was your experience?

It was a weird experience. So when I moved to Colorado after two years of investment banking, so I'm a young guy, I'm moving in with a roommate that I met on Craigslist. That's maybe a story for another day. It ends great. He came to my wedding. We're still friends.

He did not murder me. But at the time, I didn't I didn't know that he wasn't going to murder me. So we're moving inside on scene with this guy. I'm not scheduled. I ship my car from Charlotte, North Carolina. The truck comes to you and you drive your car onto the truck and then they just take it away as you stand there and wave goodbye to your car. You go, I hope, you know, they don't steal it. He's supposed to deliver it. I'm flying to Denver, you know, five or 10 days later or whatever. He's supposed to deliver it a day after I arrive.

Two days before I leave, I get a call from the trucker and he goes, we're here. And I go, you can't. I'm in North Carolina still. I'm not there. Like, you can't drop my car off. I'm not there to receive it. And he goes, well, you can either come downstairs in the next 30 minutes and pay me the other half of the fee. So pay me another like, you know, two thousand, you know, three thousand dollars or something. Or I have to keep going and I'm taking your car to California.

And I don't know when you'll get it back. So I've got to call this stranger who I've never met, who I'm about to live with and go, so I need you to go downstairs and give this guy $2,500. I hope you have $2,500. Give this guy $2,500 and take delivery of my car, having never met me. So he does that. And I guess he had my car as collateral for the $2,500 in theory, but he didn't have the key to it because they just kind of like wheeled it off.

So luckily, this guy did not steal my car for $2,500 and everything worked out fine. But the trucker is not always the most reliable. Super interesting. Well, it ties back to my weird experiences with car hauling, which are relatively limited. But when we start to talk about the broker, I'll bring that up. So let me keep reading a bit more about this deal. So this is a rare opportunity to acquire a highly profitable nationwide car hauling business complete with an integrated truck repair shop that offers exceptional efficiency and cost savings.

Established four years ago, the company has built a strong reputation across 48 states, serving a diverse range of clients, including car dealerships, auction houses, and private customers. So Heather, do I understand this right? This business has gone to $7.3 million in gross revenue in four years? I think that's what they're saying. And it's both a hauling business and a repair business, which is kind of interesting. Well, I guess Mills Trucking Company's growing this quickly is not crazy. Yeah.

I'm wondering if they like just repair their own trucks is what they're saying. But yes, I mean, if you're if you're doing freight like this, you I think as long as you have the assets to support it, you can go from zero to 60 pretty fast, pun intended. So speaking of the assets to support it, they have a fleet of 36 three car haulers and two seven car haulers. So this is not these aren't like as big as I was picturing.

These aren't like the ones that are super long that you see rolling down the highway. Yeah. I'm totally stealing Michael's thunder. Michael, read the paragraph I'm talking about before we unpack it. The business operates a fleet of 36 three-call haulers and two seven-car haulers, ensuring reliable, secure vehicle transport.

With an in-house repair facility staffed by skilled diesel mechanics, the business is equipped to handle all maintenance repairs, including major engine overhauls. This capability significantly reduces downtime and repair costs, giving the company a competitive edge in the industry.

They serve 48 states with optimized profitable routes. They have a loyal client base that has diverse clients, including dealerships, auction houses, and private customers. They have streamlined operations, outsourced recruiting, accounting, and dispatching, save hundreds of thousands annually with this in-house repair facility. You could add more car haulers, they say. They don't currently do an owner-operator program to create additional revenue streams, and then they do not have exclusive contracts with larger clients, they said.

The business is perfect for an investor seeking a profitable, low-maintenance operation. Nobody's ever said that about a trucking company. With a remote administrative team and experienced mechanics handling daily operations, the owner can focus on strategic growth or take on a semi-absentee role.

To ensure a smooth transition, the current owners will remain involved for one month, offering comprehensive support and training. Key personnel including the COO, dispatchers, mechanics, and administrative staff are committed to staying on post-sale. The experienced team will ensure the new owner receives full support through the handover. Competitive advantages. These all sound like BS. In-house repairs, I believe that one. Operational efficiency. Okay, I believe that one, but that's not really a competitive advantage. And then they have optimized routes.

So, I don't know. Heather, are you seeing any real competitive advantages in this? No, and I'm a little confused about the 38 vehicles. And when we go back up to the listing, they say only $100,000 of furniture, fixture, and equipment. And then they say $1.5 million of inventory, which I guess they're calling the truck's inventory. But even so, that would be an average vehicle value of $40,000. Yeah.

across 38 vehicles so it just seems a little off like i feel like the trucks might be more expensive than that i think a lot of times these three car haulers are more of like a trailer that gets pulled behind like a gooseneck trailer

If I had to guess. So it's not really the truck. It's just the trailer probably. Yeah, it's probably like they have a bunch of trailers and then they have, you know, a handful of pickup trucks that can, you know, move these. But you can put, you can tow three cars. You got to have a big, you know, 3,500, 4,500, you know, truck. But you see them on the road all the time and they can pull three. Now seven is a different animal. Yeah.

So can I tell my truck, my car hauling story? Oh, please. I feel like we all have one. I don't have a car hauling story. Oh, okay. Well, that picture at the top where it's the really big one with, with the double decker and, you know, um,

I have a nephew that's always been entrepreneurial and this is quite a few years ago. So he was pretty young at the time. He bought one of these and was, you know, decided to just go into this business and just start one up. And, and he hadn't been a truck driver or anything. And I guess he got his license. Anyway, one day we're driving around with my kids and there's a, the freeway off on ramp is closed off because one of these has tipped over with all the cars on it. Like it's one of those circular on ramps.

And it tipped over. So obviously it was not loaded properly. So I was like, wow, look at that. That's terrible. But no one was hurt. That was good. Anyway, found out the next day it was my nephew. And he wasn't in the business anymore after that.

So I think it's an easy business for, I guess my story sort of illustrates that I think there's no barriers to entry and it's pretty easy to go get a truck and get a license. And you may not know, you know, may not be the best people to, to be in the business and that who may be who you're competing with when you're in this kind of business. So maybe just being a little more professional and, you know, having some of these efficiencies that they're talking about, maybe that is a competitive advantage because you're competing against these,

you know, single owner, you know, single truck owner entrepreneurs. I don't know. Well, so they, they, there's a little bit in here on this expansion piece about this. So, you know, in the freight world, you have a lot of folks who the large corporate entity owns all the trucks and they just pay class a CDL drivers to haul for them in, in their, their company equipment.

They mention adopting an owner-operator model, which would be, hey, Bill, you have a fancy new pickup truck, and maybe you have a trailer, or I'll let you use my trailer, and why don't you haul for me, and you pay your own insurance and your taxes on your truck. You're not a W-2 employee necessarily. You're going to be an owner-operator, and I'll just pay you a fee and send you a 1099 to kind of contract haul for me.

You can contract haul for other people too, but it's that owner-operator model. So a lot of truck drivers will have their own rig and then just pull other people's trailers because the trailers are mostly interchangeable.

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So, I mean, that's the thing that has to settle in for me is, is there any equity value here at all? Because like what you talked about, Mills, is maybe if you're able to create like a like a franchise or like a like equity value where people are calling the parent company and then you're farming it off to these contract owner operators that can have some equity value. This and that works really well in freight because you get like a lot of repeat customers that ship a lot of freight.

I worry, like I really want to know who the customers are. If your customers here are car dealers that need to move cars between different CarMaxes all the time, that's great.

If your customers are, I'm moving to New Jersey and I need to ship my car to New Jersey and there's 10 of those and you build a route every time, I think there's zero equity value in this at all. Because those are functionally, unless you have a lock on some kind of SEO or some replenishable source of leads. Otherwise, I'm just buying a truck and competing with this guy if I want to be in this industry.

So I actually shipped a car twice. One, I just told you about the Colorado one. The other one, I bought a car in Missouri and had it shipped to Charlotte.

And through this process, I learned about the economics of this industry. It was really interesting. I used a website called Shipley.com, which is I go on and I go, I need a car shipped from Missouri to North Carolina. And I got like 20 bids of like people who would do it for different prices. And I think the pricing difference is based on if they're already going or if it would be a dedicated run or whatever. What was really interesting, though, I think I paid like 500 bucks for Missouri to Charlotte.

But what was really interesting is they charged me $250 up front, and then I paid $250 on delivery. When the guy shows up with my car, he goes, you owe me $250. I said, just out of curiosity, how much did you make for hauling this? He made $125.

So what I realized is the reason that Shipley charged me up front is that that full charge was just their profit. Like Shipley took all of that. And then so it was marked up double by the marketplace. And then the truck driver only made half of what was built. So the economics of this were really interesting, you know, both how little the trucker made, but also the way my lead was generated. These people bid on it.

And the guy, the trucker goes, I said to the trucker, where did you get the lead? And he goes, oh, I just have a guy who calls me when he has loads. So the guy that won the bid was a virtual brokerage. So it was a virtual brokerage bidding on an auction platform. And the only guy who owned any truck at all was the guy who actually delivered it. And so it was rebrokered to the guy who only charged $125 for the load and I paid $500.

So it was really interesting. And that made me think, if I ever want to get into this, you know, you just either become the virtual broker and you just take a little bit less vig and you win all the bids or you just buy a truck and you just wait for the phone to ring. So, I mean, the freight brokerage is a massive business, like massive. I just did quick Googling. Freight brokerage is like a $50 billion business in the United States. Right.

But the trucking industry in the United States is like $950 billion. So there's a sliver of trucking that is just people who are connecting the dots, right? Every guy with a truck, his phone doesn't just ring directly because he can't keep himself busy enough. And you have these massive carriers who a lot of times need excess capacity and then the brokers who sit in between.

The business development efforts for most of these freight companies is just insane because you think about the people they're hauling for it. It's almost like infinite, the number of customers that you could have. And so a lot of times it's all done, you know,

mostly with some kind of technology and some kind of aggregator. The thing that would excite me, Bill, about what you're saying is if you could find some niche, like I've seen some kind of brokerage and intermediary platforms that get hyper specific on things like maybe it's just shipping containers. You know, once the shipping containers get here, it doesn't always make sense to, you know, ship them back or backfill them. And so there's people who like get really good at just brokering kind of odd things

like kind of pieces of freight and kind of the leftover crumbs that are still massive, massive parts of the industry. So my experience with auto hauling and I was reminded of it because the name of the broker here is Samir Ozmanovic, which is a Croatian Eastern European name. And his sponsoring broker is Jerry Hasinovich. So these are Eastern European names and it totally aligned with

My experience doing auto hauling, which was I bought a car and had it shipped to me and I sold that car and it was shipped away. Both times, a Russian dude showed up in a truck and he was a total hustler, smoking cigarettes like a chimney.

Picked up the car, dropped it off, in and out in like eight minutes. So I think there's just a ton of folks that are recent Eastern European and Russian immigrants that are totally in this space. And it doesn't surprise me that when you look at where this venture says it's located, it is currently operated out of somebody's house in New Jersey. It says this business is currently home-based.

So they own all the trucks. They got to have a place to park them if they're not on – I mean they're on the road a lot. But eventually you got to park them somewhere or temporarily you got to park them somewhere. Yeah. I was going to say do you think this is a brokerage? But it says they own the trucks and repair them. So how can it be home-based? No idea. Yeah.

I'm starting to lose a little faith in the broker, even though I said at the beginning he was great for listing EBITDA. But he listed $100,000 of FF&E, and it's like 10 trucks. And also now, how is it home based? There's no actual inventory in your freight hauling. You don't take possession of it.

You don't take custody, right, in the sense it doesn't hit your balance sheet. You're just passing it along. Michael, your comment, though, about the Eastern European, we're – today's, what, May 9th. On April 28th – I mean, this is in the headlines right now. Trump signed an executive order that is kind of a funny name. It's enforcing common-sense rules of the road for America's truck drivers.

But in the last two weeks, this came out where they're basically saying, hey, truck drivers in the United States have to be able to speak English. And there's a bunch of other things about it. But a lot of the trucking industry relies on haulers who are not necessarily U.S. citizens or not natural born U.S. citizens. But it's a

The freight business and the trucking industry in the United States is in a massive upheaval right now. So just for that reason alone, this thing scares me to death. I like that they move vehicles better than just moving, you know, over the road, you know,

But it still would really scare me right now just with all the regulatory risk. Also back to the EBITDA, like we were excited at first about EBITDA, but actually this should be EBIT. This is the kind of company that we don't want to add back depreciation most likely because-

They've got to replace the vehicles. They are repairing them themselves. So this concerns me a little bit. I see this sometimes in heavy equipment companies where they say, you know, we're expensing all the maintenance capex because we employ the people who do the repairs. It's really hard to know. It's really hard to diligence that.

And a lot of times when they are doing their own repairs and you come in as a new owner, things start to just fall apart. And you kind of learn that they're keeping things kind of together with, you know, rubber bands and paper clips, so to speak. And they're just trying to get the most out of the equipment, which may mean, you know, you've got some deferred costs there where you're going to have to replace things or repair things, do some major repairs. So,

I'm even questioning now the multiple a little bit because I want to know how much of that is depreciation. In addition to that, I would like to call out what I also see as a huge red flag of BS in this listing, which is this idea that you could go and run this business as a semi-absentee owner. Everything we're talking about here makes this just like a nasty red ocean idea.

to compete in every day you're waking up starting from zero to make sure your trucks are busy like there is no way you're just kind of hanging out and focusing on as the broker says strategic growth like it's just this is this is this is not going to work that way

The really interesting thing about this business is that you start to achieve a huge cumulative competitive advantage the bigger you get. Because it says they're based in New Jersey and they have an in-house mechanic shop. So that means that the mechanic is probably in New Jersey or close by. And all your assets, all of your trucks and all of your trailers kind of come home to New Jersey.

It's a route-based business. And so you've got to imagine, right, you have the almost exact same cost if you're hauling five cars or if you're hauling seven. And, Michael, you've talked about this a lot with some of your recent experience, like in the airplane model, right, or the conference business. If you're full, you're probably very profitable. If you have four and a half vehicles, four or five, like the line is probably razor thin about where you're actually making money.

And they price all these based on the load. But imagine if you're going from New Jersey to Colorado and you don't have any drops in between, or you have to go way out of the way, like you could get upside down in this business so fast and you're

maybe not just in the way that Heather's, you know, nephew got upside down. Yeah. And there's, and there's dangers and, you know, liability and workers comp and all of that on top of it. Yeah, for sure. Yeah. I just, I don't, I have very few questions to know. You only need a couple of questions to know whether you're going to invest in this or pass on this. And the first question is how do you get your lease?

Right. And you want that to be really defensible. You want a lot of repeat car dealers, people who just call you. You don't bid on the jobs. You know, you've got fixed price contracts and you're locked in with these people and you're just their hauler of choice. Now that maybe there's some equity value. Right. If you're just kind of the phone rings, you book a load. No, thanks. I'm done.

So those are two very different businesses. And I mean, you think about the trade-offs, right, Bill? If you're picking these up from the, let's just say Ford factory, right? And it's very stable business and you move them from the Ford factory to dealers and it's just very routine, high volume, high throughput. Guess what? You're not getting paid top dollar. It's almost like a contract, right? Even if there's no contractual provisions, right?

It's steady, but it's probably bare bones pricing. If you're just doing a one-off haul, your margins are probably great, but you don't know if the phone's going to ring next week to set up that move. So there's hopefully, like you're saying, something in between where they have something incredibly lucrative and maybe somewhat proprietary, and they just are able to extract meaningful value from it. All right. Well...

Oh, let's talk about one more thing. Heather, financing. Are you getting this deal financed? Well, this is what scares me about it. I think that this would attract a lot of first-time buyers just because of the size of the cash flow. A lot of them are looking for these little bit larger SBA-sized deals, and that might bring folks in, get it under LOI, take it to a bank. A bank that

is a little out there on the risk curve might prove something like this. They would probably look for a buyer that has industry experience. I think that would probably be the key here. You could get financing, but you have to know what you're doing and you have to have this on your resume, some kind of logistics experience on your resume. And I think where the banks might miss it is Bill's point. The

the banks may not understand that the sales process tells us everything about whether we have revenue visibility and stability or not.

And the scary part about SBA loans is a lot of banks would miss that question. And just look at if the EBITDA has been stable for four years, no matter how hard it's been maybe for them to get it there, they may not realize that it's still pretty fragile based on how the leads are coming in. So yes, you could get financing, but I'd say you should be careful with this one. I think you also have to diligence the quality of the trucks, right? Yeah.

Like, are these, is maybe the $100,000 of FF&E the book value? Because these things are fully appreciated and they're really old.

Yeah. Again, I would just say the cashflow that the lender would underwrite to wouldn't even add back depreciation, even if some of it was bonus would be probably the most conservative way to do it because yeah, you're going to, you're going to be spending money. You have a repair shop. You have, like you said, the trucks have to come home. There's a lot of costs just to keep, to stay on the road in this business. So your cashflow is, I'm sure a lot less than a million two that's stated here. And the logistics on this, if you have a truck breakdown, like a thousand miles away,

and you're in the middle of a delivery and Bill is waiting at his door for the new car to show up. I mean, this is incredibly logistically difficult and it makes it 10 times harder if you don't have reliable. Bill, where are you on this one? Thumbs up, thumbs down, or you have some questions? I mean, I just, I have one question where your leads come from. If you've got a defensible contracted source of leads and you're extracting 30% EBITDA margins,

Right? You know, maybe I'll learn more. If it's catch as catch can, I hope the phone rings, I'm out. There's no equity value here. Yeah. Mills? And you can prove that because these guys started in 2021 and they're up to 1.2 in EBITDA in three years or so. Right? They just bought some trucks and here we go. Hustle. Hustle.

Mills where are you? How many trucks can you buy for $4.7 million? A lot, a lot, right? So I would be, if there's not a defensible source of leads in this business, but I want to be in this business, I'm buying trucks, getting on Shipley and just building it. I'm curious about it. I would, I think the conversation with the broker would be probably pretty interesting and entertaining and like,

Bill's saying. I mean, there's something about this that just gives me a clue that as quickly as they've grown, as large as they've grown, and they cover the United States, I think they are probably hauling for a manufacturer more than just a dealer. And I'd just be curious to really peek behind the curtain of something like this, but I think it's very, very difficult to actually get to close. Oh, as a lender, I'm thumbs down. This one makes me nervous. I think...

This is maybe okay as an add-on, but not as a first-time buyer. Yeah, I'm with Bill. There could be a diamond here, but it has to be a very special source of sustainable business. If it's just you're playing in the Red Ocean and you've got to hustle against a bunch of Russians, I'm not interested. That sounds like a lot of work.

All right, everybody, thanks for being here for this week's episode. If you enjoyed this one, please go tell a friend about it and we'll keep growing the pod, you know, one business buyer and business nerd at a time. Thanks, guys.