By Gary Stansberry – Rental Equipment Register – Dec. 6, 2024
The ideal salable rental company would have $5 million+ of total revenue (mostly rental and related) with a fleet of $10 million or more of OEC.
I’ve been handling rental industry business sales since 1995 when I started in the acquisition department for RSC Equipment Rental (now part of United Rentals). In 2000, I switched sides of the table and started representing primarily sellers of rental businesses. During that period, I have handled 145 transactions within the industry. I doubt that a year has gone by in the last 30 years that my wife hasn’t said something to the effect of “You need to diversify into another industry. You are going to run out of rental companies to sell.” Every year I assure her that there are plenty of rental companies out there left to sell. But, for the first time in those 30 years, I believe she may be (almost) right.
First, I should roughly define the characteristics of a “salable” rental company. Though we have seen some smaller transactions, the ideal company would have $5 million+ of total revenue (mostly rental and related) with a fleet of $10 million or more of OEC (original equipment cost.) The next criteria are 1) reasonable (market) price expectations of ownership, 2) a rental fleet with a median age of five years or less that presents a good appearance and 3) verifiable books and records including financial statements and fleet data. You may be surprised to learn that criteria 1), 2) and 3) above rules out more than half of the companies I talk to.
Post-Covid has probably been the most active period for acquisitions of equipment rental companies since the industry’s original consolidation “heyday” from 1995 to 2000. Exact industry figures are not available, but Sunbelt alone has completed 76 acquisitions in their last two fiscal years, not to mention the non-Sunbelt acquisitions. My company alone has handled 19 transactions post-Covid. I would estimate the overall number of acquisitions post-Covid would be well over 200, many of them among the market leaders in their trade area.