For a successful school bus contractor, the possibility of acquisition may seem at once appealing and daunting. Perhaps you’ve built a thriving student transportation business over decades and are now considering retirement, or you’ve hit a growth plateau and are seeking financial backing in order to expand.
While these are two of the most common reasons school transportation contractors choose to partner with ASTP, contractors are often unfamiliar with the path to acquisition, including this vital first step in the process: Valuation.
Business valuations have multiple benefits
As a business owner you should be in possession of a business valuation that is updated annually so you have an accurate understanding of your company’s value. Updated valuations help with:
- Taking advantage of new business opportunities that might arise
- Moving efficiently when you are ready to sell your business
- Planning an exit strategy for retirement, whether that means selling or restructuring
- Lender due diligence for new or expanded credit facilities
- Having a current scope of your business available to family and business partners, in case of illness or accident
What’s reviewed during the valuation process?
While every contractor we work with has a unique story to tell, we use a tested, established process to determine valuation, with close examination of the following:
Business documents
- Three to five years of balance sheets, income statements, and statements of cash flow
- Monthly payroll data
- Bank, loan, and debt statements (three years)
- A history of your business, including start date and any ownership or location changes
- A detailed physical inventory over the past three years (parts, supplies, etc.)
- Fixed Asset listing (vehicles, machinery, buildings, etc.) itemizing cost and net book value
- Certificates, licenses, and permits
- A current list of districts served (rates, terms, expiry, last three years’ invoicing)
- A staff roster with job descriptions, work history details, performance reviews, pay rates, employee benefit plans and costs, and annual employee turnover data
- Any other documentation such as customer service procedures or employee handbooks
- A list of suppliers, including any formal or multi-year agreements
- Any intellectual property: copyrights or trademarks, for instance
- Other legal documents such as leases, insurance policies, litigation documents for the past three to five years, and any documents related to IRS or other regulatory agency audits or inquiries
Market share
We’ll consider your business’s competitive position in your area and will talk with you about the geographic area you serve, your relationships with school districts, and your potential for growth.
Fleet age and condition
The age and condition of your fleet, as well as maintenance and repair history, are important factors. Sharing this information allows us to factor in the cost of replacing or upgrading your vehicles.
Drivers and staff
We respect and value the experience and community ties you’ve created. That’s why we get to know more about your drivers and staff, as well as your human resources policies and practices.
Growth potential
How big is your student transportation business, and how big could it be with the right resources? Your potential for growth and ability to expand are key factors in determining your business valuation.
Industry comparables
We also look at comparable contractors, whenever possible. While every student transportation business has its own unique circumstances, examining transactions involving similar organizations can be a useful tool in building your business valuation.
Why work with industry professionals?
Determining the value of your student transportation business is a complex, nuanced process – which is why it’s so important for school bus contractors to work with professionals who have experience with the student transportation industry.
Once we’ve gotten to know you and your business, our expert team will assess the information you’ve provided, factoring in variables such as market conditions and industry trends and will arrive at an accurate and fair valuation.
Next steps: Contact us
Ready to start the valuation process for your school transportation business? Reach out to us.
American Student Transportation Partners (ASTP) is a national network of trusted transportation partners ensuring access to education through safe, reliable student transportation programs. Exceptional school bus operators choose ASTP because of our innovative approach to partnership, as well as the resources we provide to help “future-proof” their operations.
To learn more about how ASTP is driving the future of student transportation, or for more information about partnering with us, contact Nick Tierno, Director of Corporate Development, at [email protected].