Common seller tricks in towing
Sellers will talk about ‘the rotation’ as if it were property, and about cash roadside work as if it were easy to verify and easy to keep.
- Municipal or police rotation privileges described as transferable when they are bid, appointed, or personal.
- Cash or informal roadside work that cannot be tied to deposits or trip records.
- Storage-lot income that depends on a lease or an informal yard.
- Wreckers that are tired, uncertified, or missing required equipment.
- Insurance loss runs that do not match the work (light-duty versus heavy, private property versus police).
Which numbers to verify
Split club work, police or municipal rotation, private-property tows, motor-club, and storage. Reconcile trips to deposits. Look at average ticket and impound days. Recast the owner’s nights on a truck and in dispatch. If one motor club pays slowly, watch receivables. Heavy-duty work has different equipment and insurance and should not be blended without care.
Licensing and key-person risk
Towing is a licensed and often locally appointed business. Rotation lists, impound authorities, and yard permits can all need a new application. Insurance minimums are high and the loss history matters. Confirm you can legally hook and store in the same jurisdictions on day one, not just that the seller could.
Equipment and condition
Wreckers, wheel-lifts, rotators, and dollies have to match the work and pass inspection. Get a mechanic’s review, certification status, and lien search. A ‘fleet’ of three trucks with one in the shop is two trucks. The storage lot — fences, lighting, cameras, and the lease — is equipment of another kind.
Seasonality and the calendar
Weather, tourist weekends, and university calendars move volume. Police rotations can also shift when a contract re-awards. Look at monthly trip counts. A buyer who closes after a harsh winter should not assume the next one will match.
Customer concentration
A city rotation, a single motor club, or a highway contract can be most of the profit. Those are not assets you own. Private-property relationships with apartment complexes can also concentrate. Ask what share each source is, and what a rebid would do.
Questions to ask before you make an offer
- Which police, municipal, or motor-club contracts or rotations are in place, and what is required for a new owner to keep them?
- Please split trip counts and revenue by source for three years, reconciled to deposits.
- May I review insurance limits, loss runs, and any open claims?
- May I inspect each wrecker, including certifications, mileage, and liens?
- What is the storage-lot arrangement, remaining term, and any personal guaranty?
- How much work is cash or informal, and what records exist?
- How is dispatch staffed at night, and how many calls does the owner still take?
- What share of revenue would disappear if the largest rotation or club were lost?
- Are there unpaid tickets, impound disputes, or complaints with the city?
- After an LOI, may I speak with your accountant and a driver or dispatcher?