If you ever wondered whether you could buy an old, clean, aged MC authority instead of getting a new one and whether it even makes sense to do so, perhaps, we may be able to shed some light on the subject.
We recommend reading the article: Can you buy an established mc?
Why even consider procuring an aged MC authority for your trucking business when you can get a new authority for $300? The short answer is – it depends. It depends on how you intend using the authority. Brokers and companies may use the age and good CSA scores and a longer verifiable credit history to mitigate prospective risks while offering loads. As a trucking business, one may be able to benefit from an aged and clean authority with the quality and quantity of loads from brokers, shippers and companies looking for carriers to move goods. So, it does bring certain opportunities that can favour your business versus a new MC.
Amazon Relay, for instance, has become a staple for many carriers for consistent hauling opportunities. However, they’re particularly stringent with the carriers they approve for hauling their loads. Especially with their new updated terms of application that came into effect just this month, Amazon requires that an applicant must have an authority that has been active for a minimum of 180 days with liability insurance stipulations that are usually higher than what an average carrier would avail for operating.
From the buyer’s perspective:
If you are an Interstate trucking business, possibly looking to expand and diversify your fleet’s risks, an aged MC may be a value proposition. Buying an existing business or authority can save time, effort, and money. For instance, multiple trucks on an aged MC enables you significant recurring savings through lower insurance rates. Coupled with the preference from brokers and shippers on account of age and good CSA scores, an aged MC can allow your business an edge over a new MC authority. Although there’s no open market as such for a price range for aged, clean authorities, based on dialogue and our experience, it can range from anywhere between $15K to 30K, even upwards, depending on the seller and what stage of business they are in. For a mid scale business, this may be arguably an investment worth a considering. If, however, you are an owner operator or a small trucking company, that intends to work locally with a restricted area of operation, the return on investment of buying an aged MC might not be financially viable. Eventually, as we mentioned earlier – it vastly depends on whether such an investment lines up with your business strategy.
From the Sellers perspective:
As a trucking company, selling your authority may be a viable option if you are getting out of business or planning on suspending operations for a prolonged time. In both cases, the value derived from the age and good CSA scores of an MC authority ceases to matter. Generally, after 6 to 10 months of inactivity on the MC can bring insurance premiums back to a new MC level and quite likely push your authority back in the queue with brokers and shippers. If you fit into one of the scenarios above, selling your authority can bring you some tail end dividends for running a clean authority. However, it is strongly recommended that you do stringent background checks on buyers, ensure you have sufficient information about the buyers and that you securely make the transfer, are protected legally and free of any liabilities post the transfer.
We strongly recommend consulting an attorney or an industry expert before pursuing the option of either buying or selling and that the process is in line with FMCSA protocols. Perform thorough due diligence on whoever you do business with whether you are buying or selling an authority. The buyer inherits both the good and the bad of an authority – ensure that you have sufficient information to make an informed decision, so your investment and business are secure. For sellers, ensure that you are legally covered and free of any liability once the authority is sold/transferred.