The $12M Business Behind Global Car Shipping

0:00We'll set acquisitions anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100 % beers anymore. And thumbs downing on just the plus inventory alone. One of the biggest risks in entrepreneurship through acquisition is buying a business with fragile systems, unclear demand, or a single owner who holds all the knowledge. Franchising approaches that problem differently. You are buying into an established brand with documented systems, unit-level data, and repeatable operating playbooks. The hard part is knowing which franchises are actually worth evaluating. That's why Alex Merezniak, former CEO of 2U Laundry, built Fransy.

0:33Fransy is a free platform that helps acquisition-minded entrepreneurs explore franchise ownership without broker bias. You answer a few questions, and Fransy shows you franchise opportunities that align with your capital, lifestyle, and long-term goals. You also get free coaching from people who have actually built and scaled franchise businesses. If you are exploring ETA and want to understand whether franchising fits your acquisition strategy, visit fransy.com. That's F R A N Z Y.com. And thanks to them for sponsoring today's episode. Uh, 500 episodes later, we still start joking around and people go quick, hit record, hit record.

1:06We got to get this. So I guess we're doing something right. It's still fun. When we initially started, we were basically like, let's just hit record and figure it out. And still 500 episodes later. Uh, mills. So it's, it's Friday also. So this one always is a little bit goofy. Heather is, is 7 30 in the morning so she's still getting caffeinated up but the rest of the three of us are halfway through our mornings caffeinated and already looking at five o 'clock so this should be a good one uh what'd you find for us today mills this jumped out to me because of the photo it if you're not on youtube highly recommend it it's a semi truck with a you know a container um like a connex container on the back and there's vehicles loaded into the back of it like it looks like it's some kind of specialty like rig, so to speak, inside this Connex to transport vehicles.

1:57And it says it's a B2B auto transport and equipment rental company with 11 global patents based in Tampa, Florida. And elsewhere, it said that the business is 35 years old. So I don't know, it just like businesses like this that are kind of like maybe asset light really are intriguing to me. May or may not be asset light. I haven't read the whole listing yet. So this is on BizBuySell, one of our future aspiring sponsors. And the asking price on this business is$12 million. They say cash flow, which they list as SDE, seller discretionary earnings, is$3.4 million. And the revenue is a whopping$4.1 million.

2:42So this business has like 75 % SDE margins. Net margins. Wow. Supposedly. Supposedly. It's been around since 1991 and it says it's a 35-year-old business with 95 % gross margins and three global office locations. Website closers presents a 35-year B2B automotive transportation and equipment rental company that has built a patented alternative to traditional vehicle shipping. The business designs, owns, and leases reusable steel cassette systems used to move finished vehicles, semi-knocked-down vehicle kits, and motorcycles inside standard 40-foot containers. Their system allows vehicles to be secured outside the container, loaded by forklift, and placed inside in under three minutes, removing the need for internal lashing while reducing loading time and cargo damage.

3:41Supported by 11 active patents across key international markets, the company has helped transport more than 2.5 million vehicles across over 30 countries. The major OEM program recorded a damage rate of just 0.025 % across 118 ,000 vehicles compared to a 5.2 % industry benchmark. The product line uses three standardized base frames that carry two, three, or four vehicles with modular parts that can be adjusted for different vehicle models. Units also collapse and stack to reduce return shipping costs. 35 years old, 11 patents, 95 % gross margin, three offices, high capacity facilities, 365 days of transition support.

4:28So they're going to help you for a year afterwards and a fully paid equipment fleet. It says they earn through multi-year equipment lease contracts with automotive manufacturers, ocean carriers, and 3PL providers. Enterprise accounts typically carry annual contract values from$500 ,000 to more than$4 million. New equipment is generally built only after a two - to three-year lease has been secured and fabrication costs are structured to be recovered within the first 24 months. Most contracts remain active for four to seven years, while one customer relationship continued for more than 11 years.

5:05Gross margins have exceeded 95%. A major part of this opportunity is a pool of 6 ,501 fully paid cassettes in like new condition and ready for new contracts. Those assets were originally built for$6.3 million and now carry no remaining equipment debt. Management believes redeploying the fleet could generate more than$3 million per year with five commercial opportunities already under discussion. Manufacturing partners in two regions can also handle multi-thousand unit orders, giving the company room to respond as new lease programs are signed. I've read a lot, but there's a lot of growth opportunities here.

5:45I think we've kind of hit on the biggest one. They're looking for a buyer to invest in a well-established and highly profitable business, strong growth prospects, compelling opportunity case. Current owners are open to facilitating a smooth transition, providing training and support. codename Atlas.

6:31One of the things that originally won me over was just how hilariously easy it was to get set up. When you're starting a new business, you need to focus on actually building the business. Not paperwork, phone calls, or figuring out some baking interface that feels like it was designed 20 years ago. Mercury is the complete opposite. Everything is incredibly intuitive. I can open the dashboard and immediately see what's happening across the business. Review expenses, move money, send ACHs or wires, manage cards and permissions, and just get a really clear picture of where things stand. And when you're involved in multiple businesses at once, having that visibility without adding more complexity is incredibly valuable.

7:06Now that I've been using Mercury for a few years, traditional banks honestly feel like going back in time in a bad way. That's why Mercury is one of the few things I set up when building new businesses. Visit mercury.com to learn more and apply online in minutes. Mercury is a fintech company, not an FDIC insured bank. Banking services provided through Choice Financial Group and Column NA members FDIC. Yeah, these businesses, if I'm looking at the picture, and everything you just said, this business is a set of equipment that sits in what looks like a, well, this is a box fan that they have here, like a 40-foot high cube where you can, basically, there's a cassette that goes into that big container and you can double stack vehicles in it as opposed to what people typically do whenever I see a vehicle shipped in a container is it's two vehicles, nose to nose or butt to front, just stacked on the floor of the container.

7:55But this appears to be a cassette that goes into one of those containers. Is that what you think, Bill? Yeah, I think this is some sort of fabricated metal scaffolding type deal that essentially does a couple things. One, it lets you ship cars without damage in a container because they're touting their really low damage rate, which is substantially lower, it seems, than just putting the cars on the floor of the container. And it also allows you to double the capacity of the container because you basically let's you stack the cars on top of each other. So I imagine the value prop here is you go to people who ship a lot of cars and you go, I'm going to cut your freight in half because you're going to fit twice as many cars in every box.

8:36And I'm going to cut your damage rate by 90%. And you're going to share a fraction of those savings with me. But I'm not going to let you buy it. You're going to ship. That's how I capture the value. I only lease you the widgets. and that's how I can ensure I can continue extracting part of your savings from you in perpetuity. That's how I read this. Is that about right? That's what I think. Yep. What a fascinating business. I do have some questions though about, shocker, website closers, about the things that they've written here. So this business has$4 million of revenue, but it also says that their annual contracts are up to$4 million.

9:20Mm-hmm. um so if scroll down a little bit michael because there's there's just what i did appreciate is there's a lot of data there's a lot of numbers in here uh it says the product uses three standardized base frames that carry two three or four vehicles with modular parts that can be adjusted for different size vehicles and the units collapse and stack to reduce return shipping costs so i imagine that means like once you get there you take the cars out of the container you have all this metal scaffolding and you got to get it back because after all you don't own it you're leasing it. So you got to keep track of it.

9:50So you probably are accumulating these things at your destination port or whatever, and then you box them all up into a single container and send them back. But if you scroll down, the bits about kind of growth and their enterprise accounts typically carry annual contract values from half a million to more than 4 million. So if I sign a$4 million annual contract value, that doubles my business or that's the whole business today. I think that But I think that this business, like we're just seeing it, you know, snapshot in time right now. If they have 6 ,501 cassettes that are available for new contracts, I think we're catching it in a down cycle.

10:30And they've had contracts, they've had leases expire and they have unused kind of capacity that I think if we looked back at previous years, the revenue was much higher. Which brings a question, why is this not in demand now? Is it, you know, that fewer cars are being shipped? I doubt that. Is it that there is new technology? Yeah. Is there a competing technology like this was the best way to go for a long time and maybe now there's something else? That's what I got to believe there's something like that. Why do they suddenly have so much slack capacity and why do they want to sell now for only 3x EBITDA?

11:08Because this seems on the face of it like a great business. It says they got 11 patents. If they own the market on this type of thing, that's amazing. The other possibility is their patents are almost done. Um, which you would imagine like once the patents are done, this is just welding. So yeah. Yeah. Um, so I definitely want to diligence the patent because I don't know how much structural moat there really is in here. The other thing that is coming for this is autonomy. Um, because when you just tell the cars to drive themselves wherever they need to be, right. And charge themselves along the way, that now you're going to put miles on them and there's wear and tear.

11:49So there may still be demand for shipping cars, you know, even in a world of fully autonomous vehicles. But, and even in a world of fully autonomous trucks where you can tell all the cars just to get in that autonomous truck and then the truck to go, you still want to jam them in as tightly as possible. So I don't think it would kill that business, but I would think it'd be a headwind for business. But a personal anecdote for you guys, you know how I've been Subaru for life for the past 20 something years yes but i put down a deposit on a tesla like like the full you should try full self-driving it's like magic so i do it all the time i love it so cool life-changing because you feel like you're just getting in a cab you know my son and i went and test drove a car good trust of cars um one saturday over the summer and the tesla was the first thing we test drove by the time we got to the the driving the hyundai i was like why am i touching the steering wheel like i was so angry i didn't i didn't realize like that would be so anyway we're almost there but it's so compelling like i'm a super fan and i just can't do it anymore because their autonomy sucks plus the new outback is terrible but anyway you guys can keep your spaceship cars mills mills is going to drive his old beater truck until it expires and then he's going to buy a new one.

13:11I have a new one. Oh. I need more two. Good, you got another 20 years. Yeah. This smells, back to this deal, Heather, this smells like a company that grew really quickly to build these units out for some contracts and all those contracts have gone someplace else and they're stuck with 6 ,500 cassettes in like new conditions that are not deployed anywhere. Yeah. I think this is a boom and bust kind of business. But if priced correctly and you could just monetize the long tail and I mean it's so hard because this is like a true insider's industry you know there's not a thousand decision makers it's a very small pool and you've got to be in the room and I think it's a very hard room to get into you know in order to get in front of the people making these decisions but if you're in the room and you go to the conferences and you have these people's phone numbers I think you could diligence this very quickly and hustle your way into some growth I I mean, profits attract competition.

14:12This business - Unless you have a patent. Yes. But even then, it's going to attract some kind of competition, even if it's a potential substitute or the threat of a substitute. There's no way you keep these margins sustainably over a long period of time. I'm dying to see like 10 years worth of financial history. And I bet there's no mention here other than the like, hey, it's way in the past, but the capex for this business. You know, you're basically front-loading all the fabrication costs, and they acknowledge you, you know, you're making your money back in about 24 months in most cases. But this is a capex-heavy business, and all they're talking about is SDE, not SDE or EBITDA minus, not just growth capex, but also maintenance capex, because these things don't last forever.

14:59And this is very passive, as close to passive income as we see very often because of the way they chose to lease the equipment only, why would you sell for$12 million if you really think you're going to continue to earn$3.4 million a year? And it doesn't look like a lot of work. If you're going to take that sort of bleeding edge, so to speak, of this business, the tail, it doesn't seem like you would sell for$12 million. I bet this business is on the rapid decline. I bet it's like precipitous. There's got to be somebody who worked around their patent or something's going on. I don't know what it is.

15:40It's also, this is an interesting nugget here. They say you could add sales personnel in India, Southeast Asia, and Africa to support new OEM relationships. Like this fits into a weird niche, right? If you're sending a bunch of cars, you don't send them by container. You do on the big roll-on, row-off kind of ships, right? Roros is what they call them. By the way, we've reached the total extent of my knowledge of car shipping. But then there's this other end of the spectrum where people are buying secondhand cars out of the US and they get sent to India, Southeast Asia, Africa, and all that kind of stuff.

16:14It happens like crazy if you go across Southeast, the Southern Pacific, by the way. My wife and I went there once and we rented a car. It was a Japanese model car. So we had all the Japanese language in it because the Japanese don't want to drive old cars. So if it's not a new car, they ship it. So New Zealand was just full of Japanese hand-me-downs. But it sounds like this business just exists in this weird niche where people are shipping random cars to these poor countries from wealthy countries where stacking them for to a container is material to the price of that car. So it feels like it's just like a weird niche corner.

16:46And with China producing so many cars, I don't know how much that is a growing market. China is just flooding the world with cheap cars these days. Well, I just checked Google and there are two competitors that secure cars for shipping containers. I'm betting one of them is this listing and the other one looks like it does something very similar. So that could be the story there. Who is that competitor? When did they come on the scene? Are they cheaper? Whatever. So Heather, is this one of those, the patents look good on the listing, but in practice, the judge throws them out the court? Is that what we're thinking?

17:21Yeah, I mean, patents aren't everything. It's one design that is truly yours, but it doesn't mean there's not another design. And I guess I would think patents are a little bit under pressure now with AI because you could reverse engineer much easier, faster, come up with a slightly different design, and now you've got your own patent. So I think the moat isn't as good as it used to be on things like that. Hey, everyone. It's Bill. And I want to talk to you about Quiet Light brokerage. I was so psyched when Quiet Light agreed to sponsor the podcast because I am a customer. I have used Quiet Light to sell three businesses.

17:57And if I were selling an e-commerce or a SaaS business, I really would not consider anyone else. Like I said, I went back to them three times. I worked with three different brokers at Quietlight, had a great experience all three times. Even on one occasion, they found a buyer for a business that I just didn't know it was even going to be possible to sell. So they have pulled rabbits out of their hats several times for me. They've been in the e-commerce and SaaS business brokering game a very, very long time. They really know what they're doing. They have great reach with both buyers and sellers.

18:28And the other thing I really love about Quietlight is all the brokers there are former operators. So you can't just show up and go, hey, I'm a lifetime business broker. I want to work at Quietlight. You have to be a former operator. So they all know what it's like to be in the operator chair. So if you go to quietlight.com, they have free business valuation calls, which they'll do with you. No obligation. Just tell you what they think about your business, what they think it would be worth, and then what you might need to do to kind of get it ready for market. Those guys over there are great, great SOPs, great systems.

18:58I just felt like I was really in really good hands all three times with Quiet Light. So if you're interested in selling your business, especially in e-commerce or SaaS, hop on over to quietlight.com, fill out their onboarding form for a free valuation call, and you can tell them Bill or Acquisitions Anonymous sent you. Why is this listed by website closers? I have no idea. Yeah. I mean, maybe they have a website, but this is... They have a website. It all makes much more sense. I love the long-term ownership and lease model. The other business that reminds me of this is electric fences, like security for business electric fences.

19:40The largest provider, I think, in the country is a company called Amarok that's headquartered here in South Carolina and Columbia. It used to be called Electric Guard Dog Fence Company or something like that. And they rebranded the Amarok. But you cannot, it's very, very difficult. We had our catalytic converters stolen multiple times out of a bunch of trucks in the middle of the night. And so we went down the route of, you know, installing electric fences and they won't sell them to you. And we're like, no, what's the price to buy? And they're like, well, it'll be like$48 ,000 over a three-year lease.

20:11And we're like, but we want to own them. And they're like, oh, no, you don't. It's really, really complicated. and we're like, well, we have an electrician on staff. Like, it's not that complicated. We want an electric fence. And they're like, no, we carry insurance in case somebody touches the fence and sues you. And I'm like, we can get that too. I want to own it. They will not sell it to you. Yeah. And there's not that many companies, you know, that, that do it. If you, if you look into it and it's one of those things where like, I think, you know, there's maybe perceived barriers or, you know, perceived obstacles and hurdles to it.

20:41But this is one of those things that like, I just don't know. It could be that the companies decide, you know what, we want to own this stuff. And we're tired of paying, you know, half a million dollars a year when we could make a just slightly different capital allocation decision. I mean, I want to love this business. It's, I mean, 11 active global patents. Like, it's very interesting. And what's weird to me, though, is I wonder if this has not been managed that well in the past because they say that, like, every time they sign a lease, they build new cassettes. but then they also say they're sitting on 6 ,500 cassettes in a warehouse somewhere.

21:17So I mean, and I, you know, I got a hand to him. Like, I'm sure it's complicated, right? You get demand and someone wants to lease them and all your cassettes are out, you know, you're going to build more, but then it contracts and you've got a whole bunch of cassettes coming back. At the same time, like maybe this is great. Maybe you're stepping into six, you know, a Slack fleet. You don't have to build the cassettes like they did. You don't have all the capex you know maybe these things are fully depreciated which by the way you'll get to depreciate them again because you're buying you know you could probably allocate what they want for this business 12 million bucks they said the slack cassettes are worth 6.4 6.4 million so like there's real depreciation here um and you can asset allocate a lot of this purchase price to the assets so there's some tax advantages i would think um i don't think it's probably going to help you get a loan, Heather, because these are sort of weird assets that you can't, it's rolling stock.

22:12I know you've taught me that lenders hate rolling stock. Is this rolling stock? It doesn't have wheels, but it rolls. Well, I don't know. I don't know what you would call this, but it does say seller financing available and didn't say anything else other than that. So that seems like an acknowledgement that it's not bankable. This business to me has all the harm marks of a seller who should have sold 10 years ago, is now 73 and has health problems and is being forced to sell and has been making so much money for the past 20 years that they've just like, they're like, yeah, cool. Like I've been making$5 million a year for the past couple of decades.

22:49And when I should have sold a decade ago, I just phoned in rich and haven't been trying very hard and the business has started to go massive decrease. So I think the whole bet here is if that's the scenario, which to me, this smells exactly like that scenario is can you turn it around and get it to stop shrinking, right? Like, can you sell and get out in the market and compete? Or is that door closed on this business? Or Michael, is it not declining? Is it just cyclical? I mean, chipping is cyclical, right? So like, maybe it's just cyclical and they're at the bottom and he has to sell and you're going to walk in and look like a genius.

23:22And all, because you're going to walk into all of this fully depreciated paid for CapEx, right? And he is servicing the, you know, has spent, he put all the capex in, service the debt forward, et cetera. If you can come in here with a good structure that allows you to wait out the cycle, you know, and the next time container shipping ramps back up, you're there, you print money. Hopefully you retire most of your debt from acquiring the business. You keep your costs low, which you have, the margins in this business are phenomenal. And you just kind of wait out the next cycle and then you do it again.

23:53I think you could be creative and you could have a lot of grit and hustle and structure this correctly. And it could be wildly successful. But there's got to be risk sharing. Yeah, how do I make a deal here? Are you getting any kind of organization? You know, like the margins are so huge, I can't imagine that there's a sales team or, you know, this might be just one guy kind of running it from his computer and you're not getting, you have to put all that in. If you have to put all that in, then your cashflow is not going to be 3.4 million. You know, you maybe need to bring in another million dollars a year, an expense at least, to really have a competitive organization that you could get back on track.

24:36Michael, to your point earlier about this person and maybe their dynamic, it reminds me, I went on a site visit one time to visit a business owner. It was a business located in Columbia, South Carolina, but the owner lived in Myrtle Beach, South Carolina. And the site visit, he wouldn't come to town where the business was, he insisted on meeting at his condo, his like penthouse condo at the beach. And he had this giant TV up on the wall of cameras of everything happening in the business. He was also in his seventies. And at one point in the site visit, he said, I'm going to be really tough to negotiate with.

25:09And I was like, Oh, okay. Well, why is that? And he was like, well, I'm making $750 ,000 a year. And it's all relative, right? Number wise, but like, it was just funny. But in his mind, he was like, I live at the beach. I live in my penthouse. I mean, I monitor the business from my living room. And in a way, he's right. That makes him hard to negotiate with because he's like, I could just keep doing what I'm doing if I need to. But everybody faces that mortality. But I mean, that's - Negotiate with a guy who's making money. Some boomers watch Fox News 24-7 and some watch their business. He watches the stockroom.

25:43Yeah. Make sure everybody does that. Mills, I know you're joking around, but what you have just described though, I think is one of the fundamental challenges in buying small businesses because you have this sort of adverse selection problem where you find a marginal business and the seller definitely wants to sell it, but you don't really want to buy it. But then you find a good business that you do want to buy and you end up with one of two problems. Either it's a brokered process and it's an auction and you're going to pay through the nose or you've sourced it proprietarily and you have no gun to his head to make him sell.

26:19Right. And so like, and I have been in this chair, like just dragged on for quarter after quarter after quarter by a seller who engaged you and said, yeah, I want to sell. You may have even agreed on price. And then you can get into diligence and there's just no urgency. And like, God help you with business doing well. Every quarter, the guy's like, well, you know, I think I'm going to renegotiate. It can be so hard to force someone to the closing table. when they own a good business. I'm dying to know more about this one. And I think there is probably a lot more underneath the surface. Like Heather, to your point, is there a team or is this just like an amazing hustle?