Due diligence process.
November 17, 2017/
How to do a Due Diligence for FedEx routes
Many Buyers often ask me how to do a due diligence. The due diligence is typically a 30 day or less window where the Buyer takes reasonable steps in order to satisfy a legal requirement, especially in buying or selling of a business. It’s a comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential.
FedEx Ground has 2 unique components about the business:
- There are no accounts receivable! The Contractors are paid weekly by FedEx into their bank account. Contractors receive weekly settlements which are impossible to fake. At the end of the year, they also receive 1099 from the company.
- Few moving expenses: All Contractors have very few moving parts to their business. Your common expenses and how to verify them include:
- Payroll Taxes
- Truck & Workman’s comp insurance
- Scanner rentals (P&D only)
- Truck rentals
- Drug Testing
- DOT Physicals
- Professional Fees (CPA or Attorney)
- Bank Fees
|Payroll||Verified with W-2|
|Payroll Taxes||Verified with W-2|
|Truck and Workman’s Comp||Verified with insurance invoice|
|Fuel||Verified on settlements or credit/bank card|
|Maintenance||Verified with Monthly/ Quarterly Maintenance Records|
|Scanner Rentals||Verified with Scanner invoices|
|Truck Rentals||Verified with settlements and receipts|