FOLD OR STICK?
IS IT TIME TO CASH OUT ON YOUR BUSINESS? Avoiding potential downsides of consolidation
Article by Conor Nolan Boira Consultants
www.boira-consulting.co.uk
Last month, I spoke about the opportunities that arise in the chaos of the industry’s consolidating environ- ment. I firmly believe that our industry has reached the maturity stage of its lifecycle, where operators are acquiring other operators to secure market share and fortify their positions.
As an optimist, I view this chaos as a chance for businesses across the industry to adapt and thrive in the ever-changing landscape. However, this perspect- ive may not suit everyone. There may be many readers who would rather plan their exit than their next adaptation strategy. Sometimes there are benefits in wanting to “cash out”, rather than “cash in”.
BENEFITS OF CASHING OUT
There are several potential benefits to cashing out of a consolidating industry:
Maximising your business’ value If you believe the industry's peak profitability has passed due to consolidation, selling your business may secure the gains you have made financially. Doing so, can protect you from potential future decline in the value of your business to a potential buyer.
Asking yourself: is now the time? am I losing business? will help in establishing your next move. It’s harder to exist from a position of relative weakness than relative strength.
Reducing risk
Consolidation can lead to fewer, but larger, companies. This can increase overall risk of new competitors entering into your locality. New competitors with agile and aggressive pricing strategies could eat away at your profitability, in effect, lowering the potential value of your business to a potential buyer (subject to the buyers unique reasoning for the purchase).
Freeing up capital
The sale of your business can provide you with capital to invest in potentially higher-growth opportunities in growing industries or even early retirement.
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Contact Conor at
conor@boira-consulting.co.uk with the subject line “I want out” for more information.
MAY 2024 PHTM
Consolidation can sometimes lead to reduced com- petition, innovation and efficiency. Cashing out lets you sidestep these potential drawbacks to your business.
Adapting to these environments requires time and effort to navigate. If you have lost interest in “fighting the good fight”, you can spare yourself the challenges that such change would require.
Taxation changes
A lot of noise has been made about the treatment of taxation on fares. This has led many operators to seek out specialist advice to ensure their compliance; a situation further complicated by the treatment of drivers potentially leading them to be found as “workers” or “employees”.
Cashing out could save you the hassle of having to navigate your way through these taxation and employ- ment matters, and the issues that stem from them.
Industry outlook
As noted above, the industry is, in my opinion, consolidating. It will be difficult to assess for how long this will occur and how long it will take for the lifecycle to reach a stage of decline or renew itself due to new developments in technology, services or legislation.
Cashing out can free you from the speculation and investment in catching the industry’s next big shift or service offering.
CONCLUSION
Despite the challenges, some businesses will inevitably thrive more than others. Cashing out of a consolidating industry can be a wise move if it aligns with your personal goals/attitude and your risk tolerance.
Interestingly, current market conditions may favour those contemplating an exit.
Thinking of exiting?
If you are an operator with a fleet of more than 80 drivers per week and you are seeking to or are considering “cashing out” on your business, feel free to reach out. We may be able to assist you.
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