You started your hauling company because you identified a need for a service and decided there was an opportunity to make a profit filling that need?—?but you knew it wasn’t going to be easy to make it a success. You and your team have had to grind and hustle to provide a high quality service to establish your market presence and generate profit. Now your company has real value, and like any successful entrepreneur, you’ve started to think about a potential exit plan. Before an interested buyer comes along, you’ve got to make sure you’re doing everything to maximize your company’s valuation and make sure to reap the full reward for all of your hard work.

In order to start a conversation, potential buyers will propose a headline valuation based on the financial statements you provide them, but by the time a transaction closes, the actual purchase price is often lower than where it started. There’s another set of information, revealed throughout the due diligence process, that can impact value and which buyers’ can point to in hopes of getting the best deal possible. The good news is that with the right tools, you can take control of the situation, offering insights and verifiable data to dictate a more accurate and favorable picture of your company and help maximize your return. A few of these areas are asset (i.e. waste containers) verification, revenue stability and quality and operational efficiency.

Asset Verification

Our experience at Compology, having worked with hundreds of haulers and having deployed sensors on thousands of containers of all types and sizes, has been that haulers can typically only physically verify the existence of roughly 70% of the containers they have on their books. Often, this is a result of human error in tracking and documentation (rather than theft), which is inevitable when constantly moving containers across large service areas over long periods of time. Sure, for smaller operations, potential buyers can more easily physically verify assets, but in most situations, accurate, manual asset verification is too time consuming and nearly impossible. Potential buyers often address this asset uncertainty by deducting from their initial valuation.

So how do you keep buyers from reducing their purchase price? By being proactive and leveraging technology. Remove human error from the equation by implementing affordable, automated tracking tools, like Compology. By using GPS to track your roll-off or front-load containers, you can objectively verify the exact real-time location of each container and provide an indisputable container inventory count.

Revenue Stability and Quality

During the due diligence process, buyers may also challenge the stability of your revenue stream by bringing into question the quality of your customer base. For example, a buyer may try to classify a client as a temporary rather than permanent revenue stream. Right now, you might be able to show how long you’ve served a customer and what the service agreement looks like, but by tracking real-time and historic container specific usage data, you can demonstrate customer usage statistics (turns, pulls, fill rates, length of service relationship, etc.) that will objectively show the quality of your customer base and your revenues. This data provides transparency and clarity, helping you secure a higher valuation.

Operational Efficiency

Monitoring up-to-date container location and fullness remotely can help haulers 1) avoid dry or less than efficient runs by knowing which containers need service and which don’t and 2) maximize asset utilization (trucks and containers). Fewer dry-runs ultimately results in reduced truck-related costs by minimizing truck wear and tear and variable operating expenses, while maximizing asset utilization helps avoid excess inventory costs. Since cash flow and CAPEX are key determinants of value for potential buyers, optimizing these has a direct correlation to maximizing value.

Know Your Worth

While current customer contract structures may incentivize the use of container monitoring data in a variety of ways, the value of this data goes beyond current operations in that it can clearly help maximize proceeds in an M&A transaction. At a minimum, Compology’s data can help haulers defend against acquisition price reductions, and in many cases, justify price premiums through clear and undeniable performance and asset statistics.

Written By

Andreas Y. Gruson - Executive Chairman - Compology


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