Three ways fleet ownership can smooth out business transitions

On the tail of a relatively flat mergers & acquisitions market, and amid economic uncertainty from recent policy announcements, including tariffs and trade negotiations, many fleet owners find themselves thinking about both their personal futures and their professional legacies.

Despite recent challenges, such as inflation and rising labor costs, high fuel rates, and higher interest rates, market experts are predicting a turnaround in M&A activity. Between a build-up in available capital from private equity and the pressure to scale to remain competitive, the fleet industry is likely to see a continued trend in consolidations.

This means that fleet owners and operators, as well as those who provide essential services to the industry, could receive unexpected offers that will be hard to pass up. Whether you’re hoping to transition your business soon or years from now, proper planning today will increase your economic opportunities whenever that change occurs.

There are three steps every fleet industry business owner should take to be prepared for a smooth business transition and to ensure your personal finances benefit from a sale.

1. Clarify your goals and timeline

Know what you need to get out of a business transition and your time frame by when you need it.

Begin by creating or updating a personal balance sheet to get a real understanding of your current finances, including assets, liabilities, and ownership structures. This document lays the planning groundwork for several critical strategies, including tax, estate planning, and financial independence assessments.

Assessing your financial independence leads to an understanding of the amount of money you need to have saved or invested to be fiscally ready to live your life as you want without income from the business. This figure will serve as a “quick check” on if a sale of your business, as it is now, is viable.

This financial independence number will also inform the time frame that is feasible for a transition. Ask yourself: Are you considering a sale because you’re done and want to walk away? Or because you’re looking at the next five to 10 years and thinking about what types of transitions you need to make?

Whether it’s a sale, merger, or passing the operation to family or employees via an employee stock ownership plan (ESOP), each option has different levels of flexibility and opportunity for buyer types. If you have a low bar to meet financial independence, then you have more flexibility in how you transition and to whom. Meanwhile, a high bar restricts you to the highest bidders, who may have their own considerations associated with their offer or will need more assurances (earn-outs, seller notes, etc.) that they have protections in place post-close.

2. Evaluate your estate and income tax planning opportunities

Using your financial independence number and timeline, determine if the sale of your business is likely to generate more money than you need to live the lifestyle you desire. If you’d wind up with cushion above what you need, considering estate and income tax planning at this stage can produce significant financial benefits to you and your family, both now and in the future.

Taking control of your income taxes through strategic use of deductions (charitable gifts, etc.) and timing is a key part of transition planning. It helps you maximize after-tax proceeds from the business sale and align your financial outcomes with your long-term goals.

In addition, where applicable, engaging in pre-sale estate planning can reduce estate taxes (a 40% hit if/when they apply), preserving wealth for future generations. Some estate planning strategies include:

• Gifting or selling interests to family trusts or LLCs early using valuation discounts to shift more value into buckets not subject to estate tax in the future
• Using a Spousal Lifetime Access Trust (SLAT) to move assets out of the estate while still retaining access to them via your spouse

It’s important to stay abreast of potential federal estate tax law exemption changes. As of this writing, the exemption (currently set at $13.99 million per person) is scheduled to revert to its pre-2018 levels on Jan. 1, 2026, unless Congress acts. This means a 50% drop to a cap of approximately $7 million. While most tax professionals predict that the current exemption will be extended, if estate tax applies to your situation, lifetime gifts bring real value to your family regardless of what happens with the exemption over this next year.

3. Work with the experts

Assemble a team of experienced professionals that includes a wealth manager, M&A and estate planning attorneys, a CPA experienced in transactions, and an investment banker—specifically one with experience in and a deep understanding of the fleet industry market today.

These experts will help you determine if now is the time to go to market or what to do to position your business to be ready on your timeline.

Fleet industry business owners who take the time now to clarify their goals, optimize tax strategies, and surround themselves with the right advisors will be best positioned to realize the full value of their life’s work when the time is right. Planning isn’t just about preserving assets — it’s about unlocking opportunities.