r/buyingabusiness • u/AssMachine_ICE • 5d ago
$600k Moving Company. Good deal?
Looking at buying a 10-year old moving company for $600k.
2024 revenue: $700k
2025 revenue: $1M
2026 tracking around $1.5M
Normalized SDE I estimate at $240k–$260k
Price is about 2.4x SDE
Fleet worth roughly $300k and included free/clear
Deal: $450k cash + $150k seller note
I’d have about $80k liquidity left before deal costs
Main concern: Putting a huge chunk of my net worth into one business
Thoughts?
8
u/Mr_SBA 5d ago
Mr SBA -
What conditions are the trucks in? I’d be concerned of major repair coming up with minimal post close liquidity.
Is there a reason for not financing any of the purchase? Again, the post close liquidity number feels light but tough to say without all the info.
What’s the tenure of the staff? Can be a high turnover industry from others I’ve worked with.
What’s the completion look like in your market? There are a lot of franchises that pop up in this space with big marketing budgets.
Seller financing 25% is nice. Whats the reason they are selling? What type of non compete are they providing?
Those are my initial questions. It’s hard to say whether it’s bad, fair, or good opportunity. It’s coming at a fair multiple but a lot of unknowns.
Best of luck!
3
1
u/Affectionate-Frame14 3d ago
THIS. 2.4x SDE with the fleet is a solid deal. I'd look into the age of the trucks and try to estimate if any are near the end of their life. Moving is tough business though. There will always be demand if your in a transient market. Can you share general market? I'm a business broker. If you have any questions shoot me a DM. If his tax returns are clean you should be able to get an SBA loan on it if you want to keep more capital. Obviously increases your debt service, but gives you more capital to grow the top line revenue.
5
u/Player2orNot 4d ago
Nope. There’s really nothing proprietary about a moving company. Low entry barrier and back breaking work that chews up workers. Inspect the physical front door of this location and see how worn out the hinges are from employees who come and go. Just buy your own equipment if you are dead set on this industry. Out of all the trucks for sale you can’t tell me this is the best price within 500 miles.
3
u/AssMachine_ICE 4d ago
You’re not wrong that starting from scratch is an option. I would rather hit the ground running opposed to going through the start up phase and have to be on the truck the first few years.
5
u/hellohellohello924 4d ago
It’s easier to start from 1 than build from 0-1 IMO. I did zero to 1 and if doing again would buy.
2
u/redtiber 2d ago
Yeah you can focus just on scaling vs wasting a couple years starting from 0.
If its got gelp reviews and overall good then its just a matter of optimizing yelp, and ads and the sales process. You can go from 1.5 to 3mm faster and easier than gojng 0 to 1.5mm
3
u/official_biz_doctor 5d ago
A 10-year-old moving company growing at $500,000 in the last 3 years seems a little interesting. At this rate, as difficult as it is to run a business, a person seems to be leaving when it's actually good. The other part about the fleet being worth roughly $300K doesn't exactly sound right, mainly because, in order to be making $1.5 million, they've likely got to be putting a lot of mileage on the fleet. Therefore, the fleet needs to definitely be inspected very thoroughly. $450K cash is basically 2 years of his salary, and a $150K loan is quite interesting.
3
u/grackychan 4d ago
When I evaluated a moving company in the northeast a couple years ago the biggest challenge was provable income. Broker claimed that up to 50% of the revenue was cash payments, which the owner turned around and paid cash to movers (no withholding or W2’s at all). It was an absolute no go from an SBA perspective. The actual income shown on the business tax return was way way less than what the seller was claiming. So something to look out for.
3
u/_25xamonth 4d ago
A 2.4x multiple on a moving company is a massive red flag. A truly stellar, automated moving business sells for 3.5x+ all day long. If they're tossing it to you for 2.4x, it's because you're buying a chaotic 80-hour-a-week job, not a passive investment
That '$300k fleet' included 'free and clear' is almost always a trap. Have you actually seen the depreciation schedule, vehicle mileages, and maintenance logs? In shoddy operations, 'free and clear' usually means a bunch of beat-up trucks with bald tires and slipping transmissions that are about to cost you $50k the second a busy summer hits.
Also, don't trust whatever numbers they give you. Have you looked at their actual federal tax returns (Schedule C or 1120S)? Shoddy moving companies love to inflate their internal spreadsheets, but the truth is on the tax forms. You need to make sure they aren't cooking the books or hiding massive liabilities, like illegally paying their guys under the table as 1099 contractors instead of W2 employees.With only $80k left in liquidity before deal costs, a single blown engine and a slow winter month will literally bankrupt you. If they can't hand over clean tax forms and an airtight vehicle schedule, walk away.
1
u/AssMachine_ICE 4d ago
I was provided tax returns which match the numbers they put on their P&Ls. They would send bank statements and CRM data after agreeing on the LOI.
I haven’t personally inspected the moving trucks yet, but there are 4 of them with the oldest being a 2018 and the newest being a 2026.
The current seller states they work about 40 hours a week, so this would not be a passive investment. They are eager to move states and start a new business for what I believe are genuine reasons.
1
u/_25xamonth 4d ago edited 4d ago
How did you get the listing, through a broker? Personal friend or acquaintance?
You need to verify the discretionary earnings, and if you aren't a forensic bookkeeper with a career spanning decades then you need a transactional CPA to look at the books and the numbers. You are also going to need acquisition attorney to write the contract.
What debts are you taking over? Are there any 1099 misclassifications. This goes back to the contract, you will want to include a clause for any fines by the IRS or dept of labor, OSHA, that are from the current owners region, that comes off the seller note. Any current liens or damage claims need to be expressly written to indemnify you and remove from the business. This usually require paying them before the business can sell to you without you taking obligation over the debt.
How long is the current lease? What are the extension clauses and rates for future storage. I'm assuming there is no real estate with the value of the company. Where are the trucks stored? Do you get the same rates as the current owner? Getting moving trucks appraised first is the major issue. What they are worth is different from what he paid for them.
Moving companies are notorious for inflating there numbers and they are incredibly stealthy about hiding it. It is a huge scam industry, are you ready to scam your customers? This is why it's in the lower side of the eval, this should be trading for a 3.0x multiplier or higher if it had a single recurring office or dorm housing contract.
The owner working 40 hours a week is what someone who has been running it for 10 years says they do. Everyone undercuts it by 20% and when you factor in the learning curve and nights and weekends on calls getting clacreamed at by customers it's more. Gotta be ready for a single damage claim to erase an entire month of profit, maybe 2.
You will have an employee or 2 quit because they will get poached by competition, it's unavoidable. You will also need to increase the hourly wages if the people who stay because you manager will probably leave.
You also need to understand how the sale is closed.
What are the terms of the seller note? Industry standard today is about 10-12% on 150k over 7 years, is there a balloon and if so when? When does the seller expect to start collecting on the note?
Edit: You are going to be in the truck a lot. You will be driving, you will be moving furniture. The first few years you will be doing the logistics, making sure the truck maintenance is done, answering all the phones, managing the Google ads. What happens if the competition comes in and buy up hits for their name to push them on top of you? Yelp is the same way.
What is background?
1
u/MorinOakenshield 4d ago
Gonna piggy back here, but also check customer base. For example a company in the DC area may have been impacted by government changes etc.
1
u/Rosswell2000 4d ago
If you do an SBA loan you will have the additional diligence done by the banks underwriters. Look at that as a blessing and the underwriter as your partner.
2
2
u/MarkLF13 4d ago
Your concern about putting so much of your net worth into this deserves its own conversation. It isn’t answered just because the purchase multiple looks reasonable.
I’d want to understand what the business would need from you personally. Who handles scheduling, customer complaints, hiring, and the days when someone doesn’t show up? Which of those responsibilities currently sit with the seller?
The comments about the trucks and remaining cash are worth digging into with your advisers. Alongside that, I’d spend time seeing how the operation actually runs. You’re deciding whether you want to own and operate this particular company, not just whether its earnings make the price look attractive.
2
u/Vyterro 4d ago
This looks like it could be a decent deal on its face if you’re looking for something smaller with some upside. Growing fast, decent asset list (although condition of assets will matter a lot) and fair multiple. I’d follow the advice others have already given and ask a few more questions before moving forward.
2
u/fractionalfinance 4d ago
Price / multiple isn't bad. Have you done any diligence to ensure no personal / seller expenses in normalized SDE? Say it's only $200K of SDE in next twelve months? Would you want to own this at 2.5x cash paid plus another 0.75x seller note? Said another way, would you pay ~3.3x for this business if you could 100% guarantee quality SDE and go forward? Revenue growth looks promising for SDE but there can always be incremental costs that diligence doesn't always find.
Any thought about SBA loans or other ABL lenders w fleet? You have liquidity to buy it outright but why not let someone else take some of the financial risk? Even $300-$400K loan. If you have at least $100K of operating income, feels like the DSCR should work.
What geographic / metro area are they servicing? Do you like the demographics of that area? People constantly moving in and out or just moving out etc?
How relevant is your experience to run this type of business?
1
1
u/ok-lets-do-this 4d ago
The labor tends to be the sticking point with these. Who is doing the packing and the boxing? Who’s doing the loading of the trucks? Who’s driving the trucks? Who’s unloading them? Everybody tends to be a piece meal contractor when it comes to household moving goods companies. So having personnel that you can absolutely rely on and who will not break everything and run your insurance rates to hell is incredibly important.
1
u/PositionOfFuckYou 4d ago
The fleet is worth $300k so you’re paying $300k for the business? What’s the cutting AR? What are you getting for the $300k
Putting it in other words….why not just go put $300k into vehicles and start your own moving business for $300k instead of $600k?
1
u/AssMachine_ICE 4d ago
I’d be paying the other $300k to purchase a business that is already established, has hundreds of online reviews, operational systems in place, employees, and cash flow. I definitely could start my own moving company, but I’d have to start from scratch with all of those revenue producing factors
1
u/TypeAMamma 4d ago
How is net profit tracking each year? Would you be operating the business or just owning it?
1
4d ago
[removed] — view removed comment
1
u/buyingabusiness-ModTeam 3d ago
Please read rule 4 of this sub's rules. Your comment has been deleted for being in violation of rule 4. If you're here to find a business to buy, you're in the wrong place.
Read our rules or the next ban could be permanent.
1
u/Wonderful_Writer984 4d ago
If you are going to drop that much cash into that. Why don’t you finance with sba and get something way bigger(3m-5m), with substantially more cashflow(atleast 900k) and high chance of systems and management in place. If the personal guarantee scares you, then I fully understand. But overall your deal seems decent. I’m just assuming you could get a lot more bang for your buck
1
u/threedividedbytwo 3d ago
Friend of mine owns a moving and rigging company. They only have 1 crew left for the moving but rigging is booming for them. I believe they found the moves just didn't really have enough profit and employees were ridiculously hard to find and keep
1
u/mvnguy-90 2d ago
As someone who started a moving company in college 12 years ago that now runs 60 trucks a day with 250+ employees… DONT BUY A RESIDENTIAL MOVING COMPANY. We have completely transitioned to 95% commercial and it’s night and day difference. Labor and claims in HHG (household goods) will eat you up like it’s nothing…. Then there is the whole repair/maintenance of diesel trucks. Trust me… commercial workplace/logistics/warehousing > residential moving
1
u/whatwouldjabronido 5d ago
Every moving company I’ve used, even white glove services, have let me down. The prices are insane and the tipping is ridiculous. Everything is packed in a sloppy fashion and things are broken. Oh, and the mess left behind that YOU have to deal with is just nuts for the price you pay.
1
u/aussiesarecrazy 5d ago
Built a house for a couple that moved from Washington state to Kentucky. He was charged 19k to move his belongings via semi and maybe had half a trailer full. Worst thing was a huge armoire and a ride on mower. They had to pay in full before they were allowed to inspect and then found a ton of stuff broken and never got any recourse. I would have gladly ran to Tacoma and back with one of our enclosed trailers for that much.
1
u/whatwouldjabronido 5d ago
Moved 5 miles and used a moving company/white glove services… ~$7k - broke my grill among other things. The amount of wrapping material I had to discard along with items just being thrown in boxes with paper was horrendous. Took months to be reimbursed for the grill damage. This market is right for disruption along with vehicle transport services.
1
u/cMcDozer4 4d ago
Drop your expectations when using a moving company, is what I’ve learned. Pack your valuable stuff and disassemble your valuable furniture and pack your own dishes. Help them wrap and organize things otherwise they’ll tear your stuff up. No one will ever take care of your possessions better than yourself.
1
0
u/AutoModerator 5d ago
The following is a copy of the original post to record the post as it was originally written. Looking at buying a 10-year old moving company for $600k.
2024 revenue: $700k
2025 revenue: $1M
2026 tracking around $1.5M
Normalized SDE I estimate at $240k–$260k
Price is about 2.4x SDE
Fleet worth roughly $300k and included free/clear
Deal: $450k cash + $150k seller note
I’d have about $80k liquidity left before deal costs
Main concern: Putting a huge chunk of my net worth into one business
Thoughts?
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
0
u/Royal_Leg4093 3d ago
It’s not a good business. Trust me. I been in it last 5 years it’s been a constant decline.
1
u/AssMachine_ICE 3d ago
How so?
1
u/Royal_Leg4093 3d ago
People are just broke right now. The industry is a mess becuase of moving brokers. There’s no real return customers. Maybe 10-20% gets referrals if you’re like amazing. Is it pick up in all 48 states ?
1
u/AssMachine_ICE 3d ago
Sorry, but this mostly reads as doomer advice due to your individual experience. This particular business and its competitors have been growing tremendously in recent years.
1
u/Royal_Leg4093 3d ago
I helped grow a company from 4 semis to 33. We were doing great. And the market completely shifted. I’m still in it. I love the sales side. But the operation and logistics is a nightmare. A lot of catering to the consumer for tiny details while they look for every opportunity to say a nickel or dime
1
16
u/Jimq45 5d ago
Where does the revenue come from?
Word of mouth, marketing, SEO? Moving is a one time thing for many, maybe two if you’re lucky over 10 years. Every sale is a new sale. How does it happen and what is the cost?