Logistics and Last-Mile Delivery Firm
Executive Summary
This transaction involves the acquisition of a last-mile logistics company based in a densely populated metropolitan area on the East Coast. The company specializes in B2B and B2C package delivery within a 150-mile radius, serving a roster of third-party logistics (3PL) partners, including national courier networks, regional e-commerce players, and healthcare delivery firms. The company generates approximately $4.2 million in annual revenue with adjusted EBITDA of $610,000. The transaction was structured as a leveraged buyout using SBA 7(a) financing, combined with a 15% seller note and a clawback mechanism related to key contract assignment. The buyer assumed no vehicles or owned infrastructure instead, the business operated a fully leased fleet and relied heavily on contract-based driver networks to perform deliveries.
Founded in 2014, the company built a reliable, tech-enabled delivery infrastructure through a hub-and-spoke model supported by three regional staging facilities, leased short-term through flex-space providers. Delivery volume averaged over 3,000 packages per day across peak periods, with seasonal volume spikes driving nearly 40% of annual revenue during Q4. The company maintained long-term delivery agreements with three anchor clients who accounted for approximately 65% of total revenue, including a regional pharmacy chain, a mid-size furniture delivery partner, and a third-party e-commerce fulfillment provider. Although the services provided were non-exclusive, these agreements featured minimum volume thresholds, fixed rate-per-package pricing, and routing priority clauses that made the business resilient against price-based competition.
Operational Infrastructure and Financial Overview
The seller, who had scaled the company over the prior 8 years, was a former route manager with deep operational expertise but no desire to expand beyond the current market. He handled dispatch optimization, key account management, and fleet coordination personally, making seller transition risk a material concern. As such, the buyer conditioned the deal on a 6-month full-time transition period, followed by a 12-month part-time consulting agreement at $5,000/month to support client handoff, pricing model transfer, and dispatch SOP implementation. The deal was closed at a purchase price of $2.55 million, representing approximately 4.18x EBITDA.
The buyer financed the acquisition through 70% SBA 7(a) debt ($1.785 million), 15% seller note ($382,500), and 15% personal equity injection ($382,500). The seller note was structured as interest-only for 12 months at 6% APR, with a balloon payment at month 60. Importantly, the buyer negotiated a clawback clause within the seller note: if any of the three core contracts failed to transfer or were terminated within the first 120 days post-close, the outstanding balance of the seller note would be reduced by the trailing 6-month average revenue associated with the lost contract, up to the full amount of the note. This clause was triggered due to the fact that two of the three contracts did not contain explicit assignment rights, and while client relationships were strong, the buyer needed an enforceable hedge in case of attrition.
The delivery model operated entirely on a leased fleet basis, with 18 active vans and 3 box trucks under operating leases ranging from 24 to 48 months. All vehicles were maintained by a national fleet partner, and lease terms included roadside assistance and substitute vehicle availability to reduce downtime. Drivers were structured as independent contractors under 1099 agreements, consistent with prevailing industry practices. Each driver was assigned a route based on proximity, prior experience, and vehicle capacity, and was paid per stop or per package, depending on client preference. Weekly route schedules were built using proprietary software the seller developed with a local programmer, allowing dynamic re-routing and real-time tracking through integrated GPS and barcode scan events.
The core cost drivers included lease payments of approximately $42,000 per month, contractor payments of $2.2 million annually, and facility leases totaling $144,000 per year across three short-term warehouse spaces. Insurance, software subscriptions, and dispatch labor accounted for the remainder of operating expenses. Gross margins averaged 34%, and net margins remained steady around 14–15% due to volume discounts with fuel providers and driver optimization.
Due diligence focused heavily on route performance metrics, contract assignment, contractor classification risk, and lease liabilities. The buyer engaged a transportation attorney to review all IC (independent contractor) agreements and ensure compliance with IRS guidelines and state labor law, especially in light of evolving AB5-style legislation. As a precaution, the buyer created a parallel staffing entity to insulate operating risk and allow future employee conversion if needed. Additionally, vehicle leases were renegotiated pre-close to allow assignment to the buyer entity without triggering personal guarantees. The seller’s original PGs were released upon assignment, and the buyer entity executed corporate guarantees in their place, backed by SBA authorization.
To facilitate operational continuity, the buyer retained two dispatch supervisors and a senior logistics analyst, offering 12-month retention bonuses totaling $50,000, payable quarterly. The seller remained on board as transition manager for six months, performing client introductions, renegotiating rates, and conducting driver training for two newly acquired routes. The company operated a proprietary dispatch and tracking system which was integrated with client APIs for real-time delivery status, route completion logs, and proof-of-delivery images. Although not a SaaS platform, the software provided a defensible moat against competition due to deep integration and customized business logic built for each core customer.
Growth opportunities identified included geographic expansion into adjacent metro areas through subcontracted satellite fleets, implementation of a delivery management dashboard for clients to schedule pickups and track shipments in real time, and bundling warehousing with delivery services through short-term space leasing and revenue-sharing with 3PLs. Additionally, the buyer identified a growing need for HIPAA-compliant delivery in the medical specimen transport space, which could be served with modest investment in packaging compliance and driver training. Early stage discussions with a diagnostic lab partner indicated potential for a $600,000 annual revenue line if compliance milestones were met.
Risks flagged included fuel price volatility, which was partially offset through surcharge mechanisms embedded in client contracts; potential misclassification of drivers, which was mitigated by engaging a compliance firm for annual audits; and customer concentration, addressed in part through the seller note clawback clause. Further, the lease structure of both vehicles and facilities created flexibility but required careful renewal management to avoid rate increases or availability gaps.
Ultimately, the acquisition succeeded due to disciplined diligence, careful structuring of seller obligations, and post-close execution focused on client retention, route efficiency, and software reliability. Within 9 months of closing, the buyer had increased package volume by 18%, added two new client accounts, and transitioned 5 drivers from 1099 to W2 under a test program funded through a state employment subsidy. EBITDA increased to $730,000 on $4.7 million in revenue, representing a 16% increase in bottom-line performance within the first operating year. The company was on track to surpass $5 million in revenue in year two and planned to add two additional warehouses to expand service range into a nearby tertiary metro.
The success of the acquisition validated the hypothesis that a technology-enabled, fleet-agnostic delivery company with strong client relationships and flexible capacity could serve as a stable cash-flow business and a launchpad for regional growth. The use of SBA debt, combined with structured seller financing and legal safeguards on contract transfer, ensured that the buyer was protected while still offering the seller fair value and continuity for employees, clients, and operations.
