There are two potential complications with selling a haulage business that need to be looked at carefully. These include the regulatory side of things and the other involves the condition of the vehicles themselves. We explain more about these points below.
The Legal Process of Selling a Haulage Business
You can find out a lot more detail about the process of selling a business generally in our page on this website called The Sale of Business Process.
There will be a whole lot of issues that need to be sorted out by your solicitor. These will include the sale of business contract; sorting out the transfer of any premises; dealing with enquirers from your buyer's solicitors and making sure that assets, including the business goodwill, are property and legally transferred in a way that leaves you free of any claim for refunds or claims for compensation.
Below are some particular issues that will specifically concern you as someone selling a haulage or transport business.
Operators Licence and Regulatory Matters
The commercial transport sector is one of the most highly regulated sectors in the UK economy, sometimes considered to be on a par with the aviation industry. The main instrument or regulation is through the system of operator licensing and this poses challenges when it comes to selling your transport business. It is illegal to operate a goods vehicle with a maximum weight over 3.5 tonnes unless it is specifically authorised by an operators licence. So what this means is that any person wanting to buy your business can only do so successfully if they either have their own operators licence or can apply for one in time to coincide with the planned sale.
What this means is that there is no point in engaging with a potential buyer who, for whatever reason (criminal record, insolvency history, previous regulatory problems) is unlikely to successfully get their own licence. You don't want to waste time and money, and turn away other potential buyers, unless you are satisfied that the person or company you're selling to will be considered fit and proper to be licensed themselves.
The exception to this is if you trade as a limited company and the licence is in the name of the limited company. This makes it much easier if there is a share sale of the transport business because the licence stays with the company. The new directors will need to be notified to the Traffic Commissioner but this is usually done after the share sale has gone through.
The other side of the coin is of course if you have had problems with your operators licence or trouble with DVSA / VOSA etc. Your buyer will probably become aware of such matters during their due diligence process. If you have past regulatory history then it would be a good idea to take advice from us at an early stage. We can work out how best to explain these past problems and what you did to put things right to allay the concerns of your buyer.
Another thing you'll need to think through is the transport manager. It may be that you, the business owner, are the transport manager. It might be that the new owner wants you to remain as transport manager for a limited period following the sale of the business.
Financial Standing
Another aspect of the regulatory requirements when selling a haulage or transport business is the financial standing requirement. If you are selling a transport business with a large fleet, then any buyer will need to have large cash reserves for financial standing. This can severely limit the number of potential buyers out there. What you don't want to do is again waste time and money and risk turning away other potential buyers while you negotiate with people who have no chance of raising the required amount of finance.
This is something that should be established at an early stage, whether the people interested in buying your transport business are able to put the required financial reserves in place which enables them to get their own operators licence. If not, then there's no point proceeding with them as otherwise you will spend weeks and months in the legal process only for it to fall through eventually when they realise they won't get an operators licence due to their lack of financial standing.
Premises and Operating Centres Licence
Yet another regulatory issue is the operating centre for your transport business. The operating centre is the place where you have legal authority to park vehicles when not in use.
If you operate as a limited company and you're selling the shares in the company, then the process is much more straight forward. The operating centre will automatically remain with the limited company even when the shares have been sold.
If you are not a limited company then things are more complicated. The buyer of your transport solicitor will have to apply again for each operating centre to be authorised. The application process involves notice being given in the local newspaper and locals then have the opportunity to object. This can potentially result in problems and delays.
Vehicle Condition
The vehicle fleet is a source of many potential problems that will need to be carefully sorted out.
Your vehicles may be owned by you or on hire purchase. Or it may be a combination of both. If you operate as a limited company, it might be that you own the vehicles, not the company itself. You also need to make sure that V5 log books are in the correct names ready for transfer to the new owners.
A prime area for possible dispute is the condition of your vehicles. It is important that you and the buyer are realistic about vehicle condition. You do not want to have to give a warranty that all of your vehicles are in prime condition. Haulage vehicles are hard working and especially older vehicles will have things go wrong with them regularly and every safety inspection will result in a number of minor and more serious defects.
Even if all vehicles are pristine at the time of sale, its likely that something will come up in the following weeks that the buyer of your business could use to argue that the condition wasn't so good. Its important that, if possible, you specify in the contract and the disclosure process that the vehicles are sold as seen. Your buyer should compelled to relying on his own inspection of the vehicle and the records.
You shoudl make sure that all of your maintenance records are in good order and up to date. Make sure that MOT certificates, tachograph calibrations and tax are all in order and paperwork is files properly to enable the buyer of your transport business to access the records easily.
Staff and Drivers
As with vehicles, your staff and in particular drivers, can come with their own regulatory history. Criminal records, driving endorsement and history with the Traffic Commissioner involving your staff can lead to problems when it comes to selling your transport or haulage business. You should do a stock take of your staff. Make sure that they are complying with the rules on drivers hours; check their drivers licences and CPC qualifications and get disclosure from them of any convictions.