Letter of Intent Template for Acquiring an Auto Transport Brokerage

Parties and Transaction Overview

Identifies the buyer, seller, and the legal entity being acquired. For auto transport brokerages, it is critical to specify whether the acquisition is structured as an asset purchase or stock purchase, as FMCSA broker authority and the associated surety bond are tied to the legal entity and cannot always be transferred in an asset deal without re-application.

💡 Sellers often prefer stock sales to avoid asset-level tax treatment, but buyers typically prefer asset purchases for liability protection. In auto transport, if the broker authority and carrier relationships are central to value, a stock purchase may actually favor the buyer by preserving regulatory continuity. Negotiate this point early — do not leave it ambiguous in the LOI.

Purchase Price and Valuation Basis

States the proposed purchase price and how it was derived. Auto transport brokerages in the lower middle market typically trade at 2.5x–4.5x EBITDA, with higher multiples reserved for businesses with diversified dealer accounts, documented carrier networks, and proprietary TMS infrastructure. The LOI should anchor the valuation to trailing twelve-month (TTM) adjusted EBITDA and clearly define what add-backs are accepted.

💡 Sellers in auto transport frequently run personal vehicle expenses, cell phone plans, and owner travel through the business. Establish clear add-back parameters in the LOI to avoid renegotiation at closing. If the business is seasonal — common in auto transport due to snowbird relocations and dealer inventory cycles — clarify whether TTM or a normalized annual average will be used.

Deal Structure and Payment Terms

Outlines how the purchase price will be funded, including equity, SBA financing, seller note, and any earnout. Auto transport brokerage acquisitions are frequently SBA 7(a) eligible, enabling buyers to put down 10–15% equity with the remainder financed over 10 years. Seller notes of 5–10% are common to demonstrate seller confidence in business continuity post-sale.

💡 SBA lenders will scrutinize carrier concentration risk, owner dependency, and FMCSA compliance history during underwriting — not just financials. Brief the seller early on SBA documentation requirements. The seller note is a negotiating lever: sellers who resist a note are often flagging undisclosed customer attrition risk. Earnouts in auto transport should be tied to revenue retention from the top 10 customers, not total revenue, to prevent sellers from padding volume prior to closing.

Earnout Provisions

Defines performance milestones that trigger post-closing payments to the seller. In auto transport, earnouts are particularly important when the seller holds critical carrier relationships or is the primary contact for dealer group accounts. Structuring the earnout around customer and revenue retention rather than EBITDA prevents disputes over cost allocation post-acquisition.

💡 Auto transport brokers often have informal arrangements with dealer groups or corporate fleet accounts — month-to-month agreements held together by personal relationships. If the seller's top accounts have no written contracts, the earnout becomes your primary protection mechanism. Insist on the seller's active involvement in account introductions during the earnout window as a condition of earnout eligibility.

Due Diligence Scope and Timeline

Specifies the due diligence period, access rights, and the specific areas of investigation. For auto transport brokerages, due diligence must go beyond financial statements to include FMCSA compliance records, carrier vetting documentation, load board agreements, and TMS system access.

💡 Sellers sometimes resist providing full carrier rosters out of fear that buyers will approach carriers directly during due diligence. Address this with a robust mutual NDA before LOI execution. In auto transport, cargo claims history is often the single most revealing due diligence document — a high claims rate signals either carrier vetting failures or operational service quality issues that will affect customer retention.

Exclusivity and No-Shop

Prevents the seller from soliciting or entertaining other offers during the due diligence and negotiation period. Given the time investment required to evaluate carrier networks, FMCSA filings, and TMS systems, exclusivity is essential for auto transport acquisitions.

💡 60 days is standard for auto transport brokerage acquisitions given SBA lender timelines and the depth of carrier network due diligence required. Sellers in competitive markets may push for 30–45 days. If you concede on timeline, negotiate for automatic extension if the SBA lender requires additional underwriting time, which is common when the business has significant owner-operator concentration.

Transition and Training Period

Defines the seller's post-closing involvement to ensure carrier relationships, dealer accounts, and operational processes are transferred effectively. In auto transport, the seller's personal relationships with carrier dispatchers and dealer group contacts often represent the majority of the business value — an inadequate transition period is the most common cause of post-acquisition revenue loss.

💡 Sellers who have run the business personally for 10+ years often underestimate how much institutional knowledge is held informally. Push for a detailed operations manual as a closing deliverable, not just verbal knowledge transfer. Consider structuring the first 90 days of the transition period as full-time involvement, transitioning to part-time in months 4–6, to ensure carrier and customer relationships are fully anchored to the new ownership before the seller disengages.

Conditions to Closing

Lists the material conditions that must be satisfied before the transaction closes, including regulatory approvals, lender commitments, and representations verified during due diligence.

💡 The FMCSA authority and surety bond conditions are non-negotiable — any lapse in broker authority status at closing can disrupt the business immediately. Verify the surety bond provider is willing to novate or re-issue coverage to the acquiring entity before LOI execution if structuring as an asset purchase. The material adverse change clause should specifically reference carrier network and FMCSA compliance, not just financials.

Confidentiality and Non-Solicitation

Protects the seller's carrier relationships, customer lists, and business information during and after the due diligence process, while also protecting the buyer's acquisition strategy.

💡 Non-competes in auto transport brokerage must be carefully scoped. A nationwide non-compete for 5 years is often challenged if the seller's primary relationships are regional. However, given that load board-based auto transport is effectively nationwide by nature, courts have upheld broad geographic non-competes in the brokerage context. Ensure the non-solicitation specifically covers both carrier and customer relationships, as sellers have been known to quietly rebuild parallel operations using the same carrier network.