compensation insurance to name a few – according to guidelines set out by your state of operation , as well as pursuant to all federal guidelines . You will need to secure proper state and / or city business licenses where your business is headquartered . You should also look to secure an International Registration Plan ( IRP ) if your truck exceeds certain weights and if you intend to perform or conduct business across state lines . Always make sure to investigate your state ’ s guidelines and requirements as rules and regulations are exceedingly state specific .
It is always good to consult with a startup lawyer that specializes in trucking law and has experience in working with trucking companies . Consulting with a reputable CPA is always advisable as well , as a knowledgeable CPA can provide unique insight with respect to federal and state tax regulations .
Next , when merging with or acquiring existing companies , make sure to conduct your due diligence before stepping up to the negotiation table . Buyers looking to acquire or merge with an existing company should demand due diligence as a condition of purchase in any letter of intent . By requiring due diligence , a buyer will gain an inside look at the overall operations of any business being considered , the consistency and quality of financial information , and the overall perceived value of the entity . There are three areas to be addressed during due diligence : 1 . The quality of earnings before taxes , interest , depreciation , amortization and working capital ; 2 . The quality and availability of data ; and 3 . Any potential strengths and / or weaknesses of the company that could affect value . You should know the liabilities of the company you are acquiring , know the contracts and business clients you may be taking over , and know the payment habits of those customers .
Looking at the historical financial results and trends of audits , including any nonrecurring or unusual items in addition to accounting details will help you determine the quality of earnings over time . You should also consider customer concentration , the variety of transactions , commitments and contingencies , customer , and vendor contracts , as well as employee agreements and seasonability . As with any transaction , the tax liability and ramifications involving any asset purchase has to be taken into consideration . Consulting with a reputable tax advisor on your purchase plan to address taxation consequences should be performed prior to proceeding with any transaction .
To continue , if you are contemplating a complete acquisition or merger , you will need to decide how to handle assets and equipment . You will need to re-register vehicles and equipment for legal operation , properly transfer ownership , secure updated insurance , and be in compliance with proper registration in all states you anticipate operating in . There is a plethora of local regulations about vehicle and driver compliance . Remember , the vehicle owner is responsible for securing all necessary insurance and registration information . If you are becoming an asset-based fleet , you are responsible . If you are using or acquiring owner-operators or leased operators , the legal arrangements and contracts must be clearly laid out and clearly specify which party is responsible for what type of insurance . You will need to consider Unified Carrier Registration and IRP or base plate registration , understanding that you may actually want both depending on your operating model . You should also consider that while a merger may not require sales tax be paid , an Asset Purchase Agreement may trigger tax liability .
You also need to realize that some states forbid operation of the newly acquired vehicles until transfer of ownership is complete . There may be the possibility of using assets while
creating , merging , and acquiring companies is a tricky business fraught with pitfalls and legal complexity . Before the process begins , business owners should consider several issues that thoroughly need to be investigated and planned out in creating , merging , or acquiring businesses before any deal is proffered or negotiation ensues .
28 customized logistics & delivery Magazine I summer 2023