Deal structure is where outcomes are won or lost. Not just how much you receive, but how much you receive at closing, under what conditions you earn the rest, how long you’re required to stay in the business, and whether there are protections in place if things don’t go exactly as planned.

There are hundreds of variations in how transportation deals get structured. But every one of them fits within two primary categories: a 100% sale or equity retention. Understanding how each works—and where the real variables live—is what separates sellers who get the outcome they expected from those who don’t.

The Two Categories

When a buyer structures a deal, every term they put in front of you traces back to one of two frameworks.

1.  100% Sale

You sell the entire business. A multiple is applied to your normalized trailing 12-month EBITDA, a percentage is paid in upfront cash at closing, and the remainder is paid out over an earnout period tied to post-close performance. Most transportation deals fall here.

2.  Equity Retention

You sell a majority stake but retain a percentage of equity—typically between 10% and 40%—and participate in the future growth of the combined entity. These deals are less common, more complex, and potentially more lucrative depending on your situation and the buyer.

We’ll walk through both structures in detail below. Most sellers start with the 100% sale—it’s the more common path and the right foundation for understanding how these deals are built.

How a 100% Sale Actually Works

A 100% sale is what most sellers are imagining when they think about exiting. You sell the business. You get paid. You move on.

The reality is more nuanced than that—and understanding the nuance is the difference between a deal that works and one that doesn’t.

1.  Valuation: What a Multiple Actually Means

The enterprise valuation is calculated as a multiple applied to your normalized trailing 12-month EBITDA.

Normalized means that expense anomalies—costs that won’t continue post-sale—are added back to your bottom line before the multiple is applied. These are called add-backs.

• An owner’s spouse on payroll who doesn’t actively work in the business? Add-back.
• A large one-time legal settlement? Add-back.
• A retiring employee whose role won’t need to be replaced? Add-back.
• Personal expenses run through the business? Add-back.
• Start up expenses for new technology: Add-back.

Those add-backs increase your EBITDA, which increases your valuation. They can also come under heavy scrutiny if not documented and argued properly—which is why getting them right matters.

The multiple itself is driven primarily by the size of your business. Larger businesses command higher multiples. Non-asset brokerages typically attract different multiples than asset-based carriers. And everything on the risk side of your business—various concentrations, employee dependency, customer tenure—factors into the range your multiple ultimately lands.

2.  Deal Payment: Cash at Close and the Earnout

A percentage of the total valuation is paid in upfront cash at closing—typically 60% or 70%. The remaining balance is paid out over what’s called an earnout period.

The earnout period is the defined timeframe during which you receive the remaining percentage of your deal value, provided the business hits certain performance benchmarks. Earnout periods are typically measured in annual increments. The current market average is two years. Some run 18 months; a small number extend to three.

The earnout baseline is the performance benchmark you have to hit each period to be paid. It’s typically set at the normalized trailing 12-month EBITDA that your valuation was derived from. Hit the baseline, get paid. Fall short, and the consequences depend on how the deal was structured.

Sellers are generally expected to remain actively involved in the business for the full earnout duration. The buyer isn’t buying a company that walks out the door with you. They’re buying a business—its customers, its employees, its operational momentum. An owner who steps away immediately after closing increases the buyer’s risk considerably. That risk typically discounts the deal.

3.  Why Earnouts Are a Reasonable Expectation

There’s a reflexive reaction a lot of first-time sellers have when they hear the word “earnout.” Their attorney tells them it’s the biggest mistake they could make. They imagine getting locked out of money they’ve already earned.

That reaction is understandable. It’s also largely misplaced.

In non-asset transportation deals, the assets aren’t equipment or real estate. They’re your customers and your employees. A buyer needs to know that on the day after closing, those customers are still shipping and those employees are still showing up. An earnout is how a buyer manages that risk—and it’s also a signal from the seller that the business is confident it will continue to perform.

Wally Brauer, who sold Freight Solutions in a life-changing transaction, describes the logic plainly:

“Any reasonable person, if they were to put themselves in the buyer’s shoes—will see that the expectation makes sense. Especially in a non-asset deal. If you really think about it, they are buying something that has been great, but the minute the owner steps away or other key employees step away, is it still going to be great?”

The Earnout Details That Determine Your Outcome

The basic structure of a 100% sale is the easy part to understand. It’s the variations within that structure where deals get won, lost, or significantly reduced.

1.  Earnout Baselines and Shortfall Terms

The baseline is the benchmark you must hit each earnout period to receive that period’s payment. Miss it, and the consequences vary significantly by deal:

• In some deals, falling more than 10% short of the baseline means the seller receives nothing for that period.
• In others, there’s a degradation structure—for every $1 shortfall, the earnout payout drops by $2.
• Growth escalation clauses have appeared in deals, requiring the seller not just to hold the line but to grow by a defined percentage each period.
• Seller is paid the same percentage of the earnout baseline as the shortfall (95% attainment equals a 95% payout).

These aren’t hypothetical scenarios. They’re terms that get buried in LOIs and discovered when it’s too late to negotiate them out.

2.  Clawback Provisions

One protection that sellers often don’t know to ask for—but should—is a clawback provision. This allows a seller to recover a shortfall from one earnout period by exceeding the baseline in a subsequent period. If year one comes in at 95% of target and year two comes in at 105%, the seller is made whole.

Not every deal includes this. The ones negotiated on behalf of informed sellers often do.

3.  Upside on Growth

Beyond baseline performance, deals can be structured to reward the seller for growth during the earnout period. The specifics vary considerably. The point is that earnout terms aren’t fixed—they’re negotiated, and the quality of that negotiation directly affects how much money changes hands.

4.  How Risk Shapes Cash at Close

The percentage paid at closing isn’t arbitrary. It’s tied directly to how much risk a buyer perceives in your business.

Revenue and gross profit concentration: If your top customers represent a high percentage of revenue or gross profit, buyers see exposure. The more concentrated, the more risk—and the more likely they are to protect themselves through deal structure rather than valuation.

Carrier and sales concentration: Heavy dependency on a single carrier, or revenue controlled by one or two salespeople without non-compete agreements, registers as structural risk that affects how a deal gets built.

Commodity concentration: Heavy concentration in a commodity that consumers typically shy away from during down economic times can be a perceived risk factor.

Customer tenure as a mitigating factor: Long-term customer relationships reduce concentration risk in a buyer’s eyes. Tenure doesn’t eliminate the risk conversation, but it changes it materially.

The same business can produce very different cash-at-close percentages depending on how these factors are identified, documented, and presented before a buyer ever drafts an LOI.

What the Buyer Expects from You After Closing

There’s a common misconception about what life looks like after a strategic acquisition. Sellers often picture a buyer stepping in, issuing directives, and restructuring operations on day one.

That’s not how strategic buyers work.

Strategic buyers typically add the seller as a new division and leverage the existing structure—your team, your relationships, your operational approach. The expectation is that you’ll participate at roughly the same level you had been. If you weren’t deeply involved in day-to-day operations before the sale, that’s viewed favorably. It signals that the business isn’t dependent on your presence and that there’s an “heir apparent”—someone in the building who could run it without you.

The seller who demonstrates operational independence before the deal is far better positioned than the one the buyer worries about losing.

Equity Retention: The Second Bite of the Apple

Equity retention deals are structured differently. Rather than selling 100% of the business, the seller retains a percentage of equity—typically somewhere between 10% and 40%. In practice, most equity retention deals land at 20% or below. The buyer takes at least 51% to maintain control.

1.  How the Structure Works

By retaining equity, the seller participates in the future growth of the combined entity—not just the value of their own business at the moment of sale.

Here’s how that plays out: a buyer, often a private equity firm, acquires your business and may acquire others alongside it over time. The combined entity—larger, more diversified—eventually sells at a higher multiple than your standalone business would have commanded. Your retained percentage grows with the value of the whole.

The tradeoff is time. Equity retention deals typically require the seller to stay involved for a longer period than a standard earnout, waiting for the buyer to exit the combined entity.

2.  Platform Companies and Bolt-On Acquisitions

There are two primary positions a seller can hold in an equity retention deal: platform company or bolt-on acquisition.

Platform company: Your business serves as the anchor acquisition. The buyer builds around you, adding smaller bolt-on companies underneath or alongside your operation. As the platform, you carry more influence over the direction of the combined entity—and more upside if it’s managed well.

Bolt-on acquisition: Your business is added to an existing platform. You retain equity in the combined entity, but you’re one of several pieces rather than the anchor.

Being selected as the platform is a significant advantage for the right seller—one who wants to stay in, wants the expanded capability a larger organization provides, and is comfortable with a longer timeline to full exit.

Wally describes the profile of a seller who fits this structure well:

“Maybe a younger seller, maybe a more aggressive seller that feels like they’ve gotten everything they can out of their own entity, but that if they had additional skillsets they could cross-sell to their customers that this buyer already has—they’re still in love with it and they want to go.”

3.  What Sellers Have to Watch For

Equity retention deals can be extremely lucrative. They can also be structured in ways that progressively dilute a seller’s overall value in ways that aren’t obvious until it’s too late.

Excessive fees: PE firms in particular will sometimes insert management and advisory fees into the overall deal structure—dilluting  the value of your retained stake.

Corporate overhead allocations: Costs pushed down from the acquiring entity reduce the earning power of the combined entity. Your percentage of something smaller is worth less than your percentage of something larger.

Dilution from additional acquisitions: As the buyer adds companies to the platform, the percentage of the whole represented by your retained equity can shrink. Understanding how a buyer has structured previous deals is key in these transactions.

4.  Put Options: One Variation Worth Understanding

Not every equity retention deal operates within the platform/bolt-on framework. In some cases, particularly with privately held buyers, sellers have successfully negotiated what are called Put Options—the right to sell a defined percentage of their retained equity within a specific window, on their own timeline.

One example: a seller retained 30% equity with the option to exercise put options between year three and year ten—selling up to 10% of that retained stake in increments, at their discretion with a pre-defined multiple based on growth. This allowed the seller to time their exits to favorable market conditions without being locked into the buyer’s timeline for exiting the combined entity.

It’s one example of hundreds of possible structures. The point isn’t the specific terms—it’s that equity retention deals are negotiable in ways most sellers don’t know to explore.

What Sellers Get Wrong

Most of the mistakes that cost sellers money don’t happen at the negotiating table. They happen before it.

1.  Running a One-Buyer Process

This is the most consistent mistake in unrepresented deals. A seller gets a call from a buyer, starts sharing information, gets comfortable—and never introduces competition into the process. Competition creates value. Without it, the buyer sets every term. The odds that the one Buyer is Best Value (deal valuation and structure, personality match, cultural fit, skillset value, and strategic fit) to that Seller can be extremely low.

2.  Disclosing Too Much Too Soon

Before a letter of intent is even negotiated, sellers in unrepresented deals routinely share pricing, customer names, carrier relationships, and financial details they have no business disclosing. An NDA offers limited protection—and enforcing it requires litigation, proof, and time. By then, the information has already been used.  A LOI also offers very limited protection to a Seller as it is typically a non-binding legal document. 

3.  Treating the LOI as the Deal

Letters of intent contain the headline terms. The deal is in the details—the earnout baseline definitions, the clawback provisions, the shortfall treatment terms, the working capital calculation method, the escrow amounts. Each of these, and many others, are negotiating points. Each is a place where an uninformed seller loses money they didn’t know was available.

4.  Informing Employees Before the Right Moment

Employee disclosure before a deal closes can unravel everything. A key employee learns the business is being sold, processes it overnight, and comes back with demands—or doesn’t come back at all. There are right moments in the process to address your team and customers. There are many more wrong ones, and sellers going through this for the first time rarely know the difference.

The Scope of What’s Actually Negotiable

One of the most consistent things sellers underestimate is how much of a deal’s structure is negotiable—and how much that negotiation is worth.

Earnout baseline definitions. Clawback structures. Growth upside provisions. Cash at close percentages. Working capital requirements. Put options. Employment agreements for key employees, including the seller. Escrow amounts. The timing and scope of due diligence access. What information gets shared and when.

Missing one available protection isn’t just a missed opportunity. A single structural adjustment—one that an experienced advisor knew to ask for—can offset an entire advisory fee on its own. As Mike Bloss puts it:

“There could literally be hundreds of variations to earnout deals. If you miss one potential that could have been negotiated in, that one thing more than pays our fee alone.”

And it’s rarely a single missed item. It’s the compounding effect of not knowing what’s possible.

The Bottom Line

Transportation deals are not standard M&A transactions. The assets are relationships—customers who ship because of trust built over years, employees who run the business because they’ve grown with it. Understanding that changes everything about how these deals need to be structured and negotiated.

Most sellers understand the broad strokes: there’s a multiple, there’s an earnout, they’ll need to stay in the business for a while. What they don’t understand is the range of variables within that framework that can be shaped in their favor—and the cost of not shaping them.

The owners who walk away with the outcomes they expected went into the process knowing what was negotiable. They had representation that had been through these deals before—not from the outside, but from the inside.

Ready to Understand What Your Deal Could Look Like?

If you’re starting to think seriously about an exit—or if you’ve already been approached by a buyer and want to understand your options before you respond—we’d welcome a direct conversation.

We’ll walk through your specific business, identify where you fall within these structures, and give you an honest read on what’s possible.

No obligation. No pressure. Just a straight conversation from people who’ve been on both sides of these deals.

Schedule a Confidential Consultation

The post Understanding Deal Structures: What Every Transportation Business Owner Needs to Know Before Signing Anything appeared first on Next Mile.

Most transportation business owners assume if they just keep growing revenue, everything else will fall into place. It doesn’t work that way.

Buyers evaluate your business through a lens you’ve probably never used: risk mitigation, operational transferability, and long-term sustainability without you.

Here’s what that means—and what you need to start doing now.

Understand the Two Categories Buyers Evaluate

When a buyer analyzes your business, they’re looking at two primary categories:

1. Valuation Drivers

These are the factors that determine how much a buyer is willing to pay. The stronger these drivers, the higher the multiple applied to your trailing 12-month EBITDA.

Primary valuation drivers include:

• Size: Revenue and EBITDA. Larger businesses command higher multiples.
• Growth trends: Year-over-year growth, especially in the current trailing 12 months.
• Gross profit margins: Higher margins signal operational efficiency and pricing power.
• Mode diversification: Businesses running multiple modes (LTL, cross-border, drayage, specialized freight) are more attractive than dry van only.
• Employee depth: Strong leadership team, documented processes, low reliance on the owner.
• Technology alignment: Systems that match the buyer’s platform or demonstrate proprietary value.
• Skillsets: Expertise in specific types of business such as LTL, Mexico/Canada cross-border, refrigeration, open-air equipment, over-dimensional, warehousing, convention, drayage, air and ocean.

2. Risk Factors

These are the factors that determine deal structure—specifically, how much cash you get at closing versus how much is tied to earnouts, and how long you’ll need to stay in the business post-sale.

Primary risk factors include:

• Revenue concentration: If your top 3 customers represent 50%+ of revenue, this may impact structural terms.
• Gross profit concentration: Even more critical than revenue concentration. Losing one high-margin customer can crater profitability.
• Carrier concentration: If a high percentage  of your loads move through one carrier, that’s a potential Buyer risk if that carrier is lost e
• Commodity concentration: Building materials? High risk. Food and pharmaceuticals? Lower risk.
• Sales concentration: If a high percentage of your revenue is controlled by a few people without non-compete agreements, buyers see potential transition risk.
• Customer tenure: Long-term relationships mitigate concentration risk. New customers increase it.

The higher the perceived risk the more impact a deal structure may be negatively influenced,  potentially lowering the percentage of cash at close and/or lengthening  the earnout period.

What to Start Doing Now (12-24 Months Out)

1. Manage Expenses Like a Buyer is Watching

Every expense decision you make in the next 12-24 months will show up in your trailing 12-month EBITDA when you go to market. That number determines your valuation.

Technology investments:
Unless your technology is truly proprietary and will drive buyer value, avoid major tech investments. Most buyers will transition you onto their platform post-close. That $200K+ TMS investment? Probably worthless unless the buyer uses the same system.

Personnel hires:
Be strategic about senior hires, especially in back-office functions. Buyers often consolidate these roles post-acquisition. Adding expensive overhead now just depresses your EBITDA.

Personal expenses:
The cleaner your books, the better. Every personal expense you run through the business becomes a “normalization” or “add-back” that buyers scrutinize. Too many add-backs can create the perception of sloppy management or hidden costs.

Wally Brauer, who built Freight Solutions from nothing in 2011 and sold it in a life-changing transaction, describes his approach:

“I was razor focused on wanting to have the strongest trailing 12 months possible. Every new hire, every purchase—if it wasn’t absolutely necessary, don’t do it. We wanted to make sure that when we got to that final goal line, the trailing 12 months was as strong as possible to drive up the highest price possible.”

2. Reduce Concentration Risk Wherever Possible

Concentration risk is the silent deal killer. You might have a $50M business with strong margins—but if your top customer represents 40% of gross profit, buyers will heavily discount your valuation or structure the deal to protect themselves.

Revenue and gross profit concentration:
Start now to diversify. Add customers. Don’t just chase revenue—chase profitable customers that reduce your concentration percentages. Buyers will look favorably on your ability to add new customers

Carrier concentration:
If you’re running a high percentage of your loads through one carrier, start building relationships with alternatives. Buyers want optionality and redundancy.

Sales concentration:
If your business lives and dies with two salespeople, you have potential risk Document processes. Cross-train. Build institutional customer relationships that aren’t person-dependent.

Buyers will analyze concentration down to granular detail—top 10 customers by revenue, top 10 by gross profit, trends over time, customer tenure as a mitigating factor. You want those charts to tell a story of diversification and stability.

3. Make Your Business Less Dependent on You

This is the hardest shift for most founders and operators to make. You’ve built this business. You know every customer, every carrier relationship, every operational nuance.

But buyers don’t want to buy you—they want to buy a business that runs without you.

Wally puts it this way:

“The fact that my company—I didn’t go into the office a lot. I had strong people that were managing the business and they all took ownership in all their different areas. If I disappear tomorrow, that business can still run on its own. And because of the ongoing relationships that the dedicated account managers had with each of these customers, I think it was deemed a lower risk.”

What this looks like practically:

• Document core processes and SOPs.
• Build a leadership team that makes key decisions without you.
• Transition customer relationships from owner-dependent to team-managed.
• Identify an “heir apparent”—someone who could run the business if you stepped away tomorrow.

The more the business depends on you personally, the riskier the deal—and the longer the earnout period maybe.

4. Understand What “Normalization” Means (And Why It Matters)

When buyers evaluate your business, they don’t just look at your reported EBITDA. They look at your normalized EBITDA—meaning they adjust for:

• One-time expenses: Large legal settlements, unusual claims expenses, non-recurring costs.
• Personal expenses: Your spouse’s salary for work they don’t actually do. Your country club membership. Your “business” vehicle.
• Anomalies: Expenses that won’t continue post-sale.

These add-backs increase your EBITDA, which increases your valuation.

But here’s the critical nuance:
The more normalizations you have, the higher the perceived risk. Buyers may start to wonder: “Are the books clean? Is this business as profitable as it looks, or is there hidden complexity?”

The cleaner your financials going into the process, the stronger your negotiating position.

5. Avoid These Common Mistakes

Waiting for the “perfect” market:
Market conditions are unpredictable. The transportation market, like the stock market, is hard to time. If you can net enough money to set a financial legacy and not have to work again, don’t gamble that guarantee for the possibility of making more.

Focusing only on valuation:
Deal structure matters as much—if not more—than enterprise valuation. A deal offering 100% cash at close will be heavily discounted. Earnout provisions, growth upsides, clawback clauses, equity retention options—these details can be worth millions. One favorable structural adjustment can offset an M&A advisor’s fee entirely.

Not understanding working capital requirements:
Most buyers require working capital to remain in the business. Working capital is defined as current assets minus current liabilities. The larger the spread between receivables and payables, the more capital is tied up in the business.

Assuming your TMS or financial system tells the whole story:
Most TMS platforms can’t generate the specific analytics buyers need: various customer metrics by specific time frames, margin calculations by mode, commodity concentration reporting, carrier dependency analysis, customer tenure trends, gross profit concentration vs. revenue concentration, origin/destination lane reporting, forms of risk mitigation reporting. Naming convention issues exist in most TMS, preventing the accurate depiction of even basic reports Buyers are interested in. The ability to consolidate reports and graphically portray data is a plus for Buyers, and will reduce the potential for error. If you can’t produce these types of reports easily now, you’ll scramble during due diligence—and buyers may question your operational sophistication.

What About Timing? When Should You Actually Sell?

This is one of the hardest questions business owners face. Here are some frameworks to consider:

Retirement Age

If you’re planning to exit at a specific age, work backward. If you want a 100% sale, plan for a 1-2 year earnout period minimum. You may need to stay in the business during that entire timeframe. Add 6-9 months for the sale process itself. If you want to retire at 62, you probably need to start the process by 60.

Market Conditions

Market timing is nearly impossible. But if you’re in a strong trailing 12-month period—revenue up, margins strong, no major customer losses—that’s your ideal window. Don’t wait for conditions to get “even better.” Markets turn fast. However, attractive deals can still be reached during soft economic times through structures that provide upside for growth.

Desire to Join a Larger Organization

Some owners sell not because they want out, but because they want in—access to stronger technology, deeper carrier relationships, enterprise-level resources. If that’s you, timing matters less than finding the right strategic partner.

Financial Legacy

Calculate your net proceeds. Account for capital gains taxes (not personal income tax rates), legal fees, accounting fees, M&A advisor fees. If the net number lets you retire comfortably and set up generational wealth, seriously consider moving forward.

A Word About Deal Structures

Most transportation deals follow one of two primary structures:

100% Sale

• Enterprise value based on normalized trailing 12-month EBITDA.
• Cash at closing: typically 60-70% (but can be lower if risk factors are high).
• Earnout period: 1-2 years (sometimes 3).
• Earnout tied to hitting EBITDA or gross profit baseline.
• Working capital stays in the business.
• Long-term debt extinguished.
• Excess cash goes to seller at closing.

Equity Retention

• Seller generally retains 10-40% equity.
• Potential higher percentage of cash at closing (because buyer carries less risk).
• Common with PE firms; some strategic buyers offer it with PUT options.
• Working capital stays in business.
• Long-term debt extinguished.
• Excess cash goes to seller at closing.

The structure you choose impacts how long it takes to fully exit and how much risk you carry post-sale.

Wally’s deal was structured with a longer earnout but without an EBITDA baseline—unusual but not unheard of:

“Mine was actually four years. They only paid me 70% upfront. The remaining 30%—10% at the end of year two, 10% year three, 10% year four. But they didn’t have an EBITDA baseline. In a normal scenario, if it falls below the baseline, that seller wouldn’t get their earnout or they’d get a discounted earnout. Mine didn’t. I feel even more fortunate that mine didn’t have a baseline.”

Every deal is different. The key is understanding what you’re trading off—cash certainty today versus upside potential tomorrow, shorter earnout versus higher valuation, 100% exit versus equity retention for a second bite.

The Bottom Line

The next 12-24 months aren’t just about running your business. They’re about positioning your business for the right buyer, the right structure, and the outcome you actually want.

Most transportation business owners wait too long, assume their financials will speak for themselves, or underestimate how much buyers care about operational transferability and risk mitigation.

The owners who get the best outcomes start preparing years before they go to market.

They manage expenses strategically. They reduce concentration risk. They build leadership depth. They make their businesses less dependent on themselves. They clean up their books. They understand the difference between valuation drivers and risk factors—and they optimize for both.

If you’re 12-24 months out from a potential exit, this is your window.

What you do now determines what’s possible later.

Ready to Start Planning?

If you’re a transportation business owner thinking seriously about an exit in the next 12-24 months—or if you’re not sure whether your business is ready—we’d welcome the opportunity to walk you through a comprehensive business analysis.

We’ll identify your valuation drivers, flag your risk factors, and give you a clear roadmap for strengthening your position before you go to market.

No obligation. No pressure. Just straight talk from people who’ve been in the trenches.

Schedule a Confidential Consultation

The post Planning Your Exit: What to Focus on in the Next 12-24 Months appeared first on Next Mile.

There can be many motivational reasons for the desire to exit a business. Here are just a few:

• Age
• Health considerations
• Financial reward
• Transportation ownership fatigue
• Lifestyle improvement

Note: Reason for exit can be an important consideration for strategic buyers.

Timing: understand how deals are structured

Most transportation acquisition deal structures contain an earnout provision for a seller to obtain the full deal valuation. There are hundreds of deal structure variations within two primary categories:

1) 100% purchase

• Buyer applies a multiple to the trailing 12-month (TTM or LTM) period normalized earnings (expenses credited for anomalies that won’t continue forward).
• Buyer typically pays a percentage in upfront cash and the remaining amount over a designated earnout period with an earnings baseline requirement.
• Earnout timelines typically stretch from 1 to 3 years, and sellers are typically required to remain in the business during earnout.
• Most sellers want to remain in the business during earnout to control their destiny as it pertains to realizing the deal full valuation.

2) Equity retainment

• Seller retains equity for what is referred to as having the ability to “take a second bite of the apple.”
• Both buyer and seller share in the rewards of future growth and profitability over a timeframe that is typically much greater than earnout.

3) Due diligence (plan for a long stretch)

• Along with the timeline it takes to compile initial data, introduce multiple buyers (NEVER consider one buyer), and finalize LOI/IOI details, a seller must navigate a due diligence period that can extend beyond 6 months.
• It is very common for sellers to experience “seller fatigue” during due diligence.

Financial considerations: don’t wait for the “perfect” moment

Sellers often struggle with the correct time to sell. There are many variables that can affect a transportation business and many are not within control of the seller—market capacity, political direction, the U.S. overall economy, and customer instability are a few factors.

Next Mile M&A has worked with many sellers that opted out of selling in hopes of relatively few upside dollars, only to end up selling for less. Next Mile has advised sellers to consider an acquisition trigger point that will provide a financial legacy for their immediate family, and potentially the next generation. If a seller can garner enough to financially set a family for at least the seller’s expected lifespan, the seller should seriously consider if it is worth gambling in hopes for additional financial consideration.

Financial readiness: accuracy is critical

Financial accuracy

One of the most significant mistakes a business can make is to go to market only to have a buyer find financial errors. This automatically creates distrust with the buyer and can destroy an exit strategy for an extended period.

Next Mile’s system has documented finding more than $1.75m of EBITDA calculation errors. Each business had an accounting firm it relied on for accurate financial statements.

Types of data buyers want to see (and why deals get re-traded)

The problem with most data generated from financial management systems and TMS is that many of the details buyers want are not readily available—or it takes substantial time to gather the data in the desired format. This can lengthen the process or cause a deal to be re-traded during due diligence. Re-trading is when an original valuation is lowered after financial irregularities or additional risk factors are discovered that were not previously known.

Next Mile categorizes primary data types into two main categories:

Valuation drivers (more impact on the multiple)

• Revenue trends across the last three full fiscal years, current year, and TTM period
• Gross profit trends across the last three full fiscal years, current year, and TTM period
• Gross profit by mode (market comparisons on profitability by mode)
• EBITDA trends across the last three full fiscal years, current year, and TTM period
• Normalized expense calculations with detailed descriptions (three fiscal years, current year, and each month within TTM)
  • These add-backs can be critical and come under heavy scrutiny, especially if a seller is not familiar with which line items and the proper amounts to claim.
• Line item and normalized EBITDA % of revenue trends
• Seller culture, personalities, skillsets, and strategic fit within a buyer

Risk factors (more impact on deal structure—% cash at close & earnout duration)

• Revenue concentration
• Gross profit concentration
• Mode concentration
• Commodity concentration
• Industry concentration
• Lane concentration
• DSO and bad debt history
• Mitigating factors (example: concentration somewhat mitigated with extremely strong customer tenure)

Data consolidation: show the full picture early

When data is consolidated and all positive and negative aspects of a seller are openly displayed early, the acquisition timeline is cut short, and the seller will be more likely to benefit with more positive valuations and deal structure offers.

Next Mile’s system generates over 430 graphs and charts, including reports that can take extensive TMS reporting to replicate.

TMS naming conventions can mislead buyers

Naming convention issues in TMS can be problematic and misleading for buyers. Example: entries in a TMS may include the location in the customer name, which can mislead a buyer who counts customers early to determine revenue concentration. Later, when the data is cleaned up, it can cause valuation and structure to be re-traded during due diligence.

Other examples:

• Inability for a TMS to generate accurate top ten mode data (many descriptions of a dry van alone)
• Commodity data is a risk factor that few TMS can generate

Business trends and projections: keep it factual

A seller should have accurate projections supported by factual data prior to going to market. If current trend/extrapolated data is down and future projections are unreasonably high, it will receive scrutiny and may create a negative trust factor. The data needs to be clear and concise with factual support.

Legal and safety

Legal and safety issues may affect a buyer’s desire to make an offer or severely impact deal structure (unusually high escrows or more restrictive earnout stipulations). Severity and timelines play an important role in timing.

What to do next (owner checklist)

• Write down your exit motivation (age, health, fatigue, lifestyle, financial reward).
• Decide what you’re open to: 100% purchase vs. equity retainment.
• Assume diligence can run 6+ months and plan bandwidth to avoid “seller fatigue.”
• Validate financial accuracy before going to market—buyers finding errors first creates distrust.
• Get your buyer-facing data organized around:
  • Valuation drivers (trends, gross profit by mode, EBITDA, normalized add-backs)
  • Risk factors (concentrations, DSO/bad debt, mitigating factors)
• Clean up TMS naming conventions (customers/locations, mode descriptions, commodity tags).
• Keep projections tied to factual data—avoid “pie in the sky” numbers.
• Don’t run a one-buyer process: NEVER consider one buyer.

Questions to ask your advisor

1. Which structure fits my situation best: 100% purchase or equity retainment—and why?
2. What earnout terms are typical for a business like mine (timeline, baseline, and my required involvement)?
3. How will you run a process that introduces multiple buyers?
4. How are we validating financial accuracy before going to market so we don’t lose trust in diligence?
5. What are the likely valuation drivers for my business (and what do we need to show cleanly upfront)?
6. What are the top risk factors buyers will see (concentration, DSO/bad debt, mode/commodity exposure), and what mitigating factors matter?
7. How will we standardize the TMS so customer/mode/commodity data doesn’t change mid-process?
8. How will we keep the process from dragging and avoid “seller fatigue”?

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