$36.1M
$3.8M
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This well-established freight company provides drayage services from the ports of Los Angeles and Long Beach to warehouses in Southern California. The company was established over 37 years ago and has over 130 customers in diverse industries. The company uses a hybrid brokerage business model in offering lease-to-own trucks to the carriers/contractors. The company works with 105 drivers and has 43 leased-to-own trucks. The company has about 26 full-time and one part-time employee. The company leases multiple locations for storage. Revenue: 2019: ~ $26.1 million 2020: ~ $24.2 million 2021: ~ $33.8 million 2022: ~ $36.1 million 2023: ~ $20 million (Jan-Oct) Adjusted EBITDA: 2019: ~ $3.8 million 2020: ~ $3.5 million 2021: ~ $5.9 million 2022: ~ $5.9 million 2023: ~ $2.3 million (Jan-Oct) Please send your inquiries to mmanavi@tworld.com indicating your interest. We will email you a blind teaser upon request. If there is an interest, we will discuss the next step. We are offering this acquisition through a controlled auction process.
Why we like it
- Earnings quality is real but cyclical. Adjusted EBITDA has ranged from $2.3M annualized in the soft 2023 market to $5.9M at the 2022 peak, so the normalized number sits somewhere in the $3.5M to $4M zone based on the 2019 and 2020 base years. You are buying a business that generates cash across the cycle, not just during freight booms.
- The moat is 37 years of port access and relationships. Drayage at LA/Long Beach requires terminal appointments, chassis logistics, driver networks, and customer trust that take decades to assemble. Over 130 customers across diverse industries reduces concentration risk and reflects a franchise that new entrants cannot easily replicate.
- Port drayage is essential, non-discretionary infrastructure. As long as goods flow through the two largest US container ports, someone has to move containers to inland warehouses. Volumes fluctuate with the freight cycle, but the underlying service is a need, not a want, which makes it structurally more defensible than most SMBs.
- The lease-to-own driver model is capital-efficient. Running 105 drivers against 43 lease-to-own trucks shifts asset risk and creates a recurring lease revenue stream while keeping the company lighter than a pure-asset carrier. That structure lets the business flex capacity up and down with volume without carrying the full fleet on its own balance sheet.
- Lean headcount relative to revenue signals operating leverage. Roughly 27 total employees supporting $36M at peak revenue points to a tight, efficient back office. A disciplined operator can push volume through the existing structure without proportional cost growth.
How to improve it
- Rebuild a normalized earnings bridge before doing anything else. The 2023 downturn masks the true run-rate, so recast the last five years to establish a defensible mid-cycle EBITDA and price the deal off that number rather than the peak. This also becomes your operating baseline for the first year.
- Diversify beyond spot-exposed drayage into contracted volume. Lock in dedicated lanes and multi-year agreements with the largest of the 130 customers to smooth the revenue swings that took the business from $36M to a $24M annualized pace. Contracted freight commands a premium at exit and dampens cycle risk.
- Layer in transloading and warehousing services. The company already leases multiple storage locations, so formalizing transload, cross-dock, and short-term storage offerings captures more of the container's journey and adds higher-margin revenue per move. This deepens customer stickiness and raises switching costs.
- Tighten the lease-to-own program economics and driver retention. Audit the 43 truck leases and 105 driver relationships to reduce churn, standardize contracts, and ensure the lease stream is priced to cover maintenance and default risk. Driver stability directly determines whether you can capture volume when the cycle turns.
- Install real freight-market pricing discipline and a rate desk. Build systematic visibility into per-container margin by lane and customer so pricing moves with market conditions instead of lagging. In a cyclical business, the operator who prices fastest protects margin when rates soften.
- Invest in dispatch and container-tracking technology. Better appointment optimization, chassis management, and route density can materially cut empty miles and dwell time. In drayage, small efficiency gains per turn compound into meaningful EBITDA at 130-customer scale.
- Pursue tuck-in acquisitions of smaller drayage operators. The LA/Long Beach market is fragmented, and a well-capitalized platform can buy driver capacity and customer books at low multiples during the current soft market. Consolidating fixed overhead across acquired volume is the fastest path to multiple expansion.
Diligence notes
- Understand the depth and cause of the 2023 decline. Revenue fell to roughly $20M for January through October 2023 versus $36.1M in 2022, and EBITDA to $2.3M. Determine how much is broad freight-rate normalization versus lost customers or drivers, because that distinction defines whether the run-rate is $3M or $5M.
- Scrutinize customer concentration within the 130-customer base. Confirm no single customer or handful of customers drives an outsized share of revenue, and review contract terms, tenure, and renewal history. Diverse industries is a good sign, but the revenue distribution matters more than the customer count.
- Examine the lease-to-own truck and driver arrangements closely. Review the 43 lease agreements and the classification of the 105 drivers, since owner-operator versus employee treatment carries real misclassification and liability exposure in California under AB5. This is the single biggest legal risk in the deal.
- Assess the leased storage locations and any environmental or lease-transfer issues. Multiple leased sites mean assignability, remaining term, and rate escalations all need review, since the business does not own its footprint. Confirm the leases transfer cleanly to a buyer without landlord consent traps.
- Verify the quality and maintenance status of the truck fleet. Older port drayage tractors face California emissions and Clean Truck rules, so quantify capex needed to keep the 43 trucks compliant and running. Deferred maintenance or a coming regulatory retrofit could turn this capital-light model asset-heavy fast.
- Confirm working capital and receivables cycles in a freight-brokerage model. Drayage and brokerage businesses can carry meaningful receivables and driver-payment timing gaps, so understand the cash conversion cycle and what working capital the buyer must fund at close. This determines true acquisition cost beyond the purchase price.
Source
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