Selling, Succeeding & Staying Independent: Doug Grawe of The Grawe Group

Speaker A: It's Thursday, August 20th, right? Yeah, August 20th, 2026. And welcome to episode 144 of the Driving Forward Podcast. Whether you're joining us live or listening in on one of our 18 platforms, including Wreaths Across America Radio where we broadcast every Tuesday evening from 4 to 5pm Central Time, we appreciate your support. Coming up, we've got uh, more events we're going to be at um. Oh yeah, Bit Freighter will be there this weekend. I, I'd forgotten about that one. Next week or two weeks from now I'll be uh, with the Truckload Carrier Association Call on Washington. That's my first official call on Washington. Uh, and I'm excited about it. I was just on a call with uh, TCA prior to the podcast, going over planning and, and education related to it. So I'm, I'm definitely interested in that. Uh, another member of our team did one earlier this year and had nothing but positive feedback on it. So looking forward to advocating for the industry and everyone involved in it there. Following that we'll have James uh, Richardson at Clio Connect in Chicago, uh, I believe Susan Mayo, Mike Solars and Robert Bain at McLeod. Um, following that I think Susan's at the Tennessee Trucking association and uh, uh, we're still working out the attendance at Trimble Insight. So well, we'll also have a large crew at ATA MCE as always. So I, I think there's potentially a few other things that are sprinkled in there. But uh, we are very, very busy through the end of October with just conferences and uh, um, meetings, uh, generally all around. So if you're going to be at one of these events and want to connect, uh, please feel free to reach out via uh, the website, via LinkedIn, via email. Uh, we would love to meet you there. Today's guest is the guy trucking executives call when, when, when the stakes get high, uh, when fine print gets thick. Doug Gross spent better than a better part of two decades at Dart Transit Co. One of the largest owner operator fleets in the country. Uh, where he rose to a general counsel role and later served as, as general counsel for Open Force, uh, a platform built around independent contractor compliance. Today he runs the GR Group, uh, a Minneapolis based firm that's part law practice and part business consultancy giving family owned and closely held trucking companies the kind of legal uh, advice and firep power that usually only the mega fleets can afford. So additionally, I know Doug works with a lot of large companies as well. He also hosts his own show, the GRA Pod, uh Transportation's general council podcast. And, and a fun fact about four years ago, uh, I was a guest guest, uh, seat on his podcast talking about cyber security. Uh, that was previous to starting driving forward. So uh, uh, that's been some time. So today we're gonna flip the mics and I get to interview Doug. So m and a family business transitions, uh, independent contractor programs, customer contracts, corporate governments, governance. Uh, this stuff is the stuff that companies, uh, quietly decide which companies are gonna survive and uh, which ones don't. And there's really no better guy to walk us through this from a generalist standpoint on the subject matter. So with further ado, Mr. Doug Gras, welcome to the show.

Speaker B: Thank you, Nate. I greatly appreciate it. Those are some very kind words. I appreciate it. And it's good to be on this side of the mic.

Speaker A: Yeah, yeah, absolutely. You don't have to think much about it, which, you know, I'm really not too concerned about you and uh, I, and thinking much about it because we'll start down the subject line and that'll probably be the end of the show. So we can talk for hours as, as we started to, uh, at. We. We got to spend more than usual amount of time together at tca Refrigerated. Um, uh, you know, what was that a month ago? I don't even know anymore. Everything blends together. Everything blends together. So.

Speaker B: Yes it does. That was a nice time. It was great to catch up and uh, not the worst place to be in Nashville for a couple of days.

Speaker A: That, that rooftop bar in Nashville was a, uh, perfect setting. It wasn't too hot, uh, which is always important in Nashville, uh, in July. Um, but yeah, it was a great, great. I always liked the refrigerated meeting. Uh, that's only my second time going, but I think it's on the list for future events. It's always, uh, a good, good discussion with good people there. So you spent a long time at Dark Transit, right? Um, you rose to general counsel there. Um, what did growing up professionally inside a large family owned carrier teach you about the industry that law school never really could?

Speaker B: Yeah, uh, great question. Yes, I was about 15, 16 years, uh, within the Dart family. Um, the biggest things that Dart was able to provide me, I got some great mentors. I got a great couple of legal mentors. There was a guy by the name of Jim Hardman, um, really kind of a lion in the industry. Just did all sorts of wonderful things in the legal world for trucking companies, for owner operators, um, in the Orin Family who owned Dart was really good about letting me spend time with Jim and pick his brain and so on. Um, then the Orin family themselves, just teaching me how they went about making business decisions, how they evaluated risk. They're really smart guys and gals and they had some long term, uh, managers, executives that were just always good about letting me be young, let me ask dumb questions, uh, and entertain me a little bit in terms of, yeah, this is why you don't want to do this in a contract. This is why that makes sense or doesn't make sense. They were just really good to me. And so I learned real fast. I remember talking with Dave Oren, the oldest son, uh, and he said, hey, you know those emails you send that have like seven or eight paragraphs in them? I'm not going to read that much. You got to get your advice down to like two paragraphs, couple of bullet points because I've got 2,000 of these things I got to get through and whatever, like you got to cut to the chase. You worry about all the legalese behind the scenes. Just tell me what I need to know so I can make the business decision and move on. If I, if I walked away with any one thing, it was that the second thing would be, as you said at the beginning, Dart was an owner operator company. So just learning about every, all things independent contractors and owner operators and all that kind of stuff. That, that was powerful.

Speaker A: Oh, great, great point. And, and the abruptness to an executive I think is uh, it, so it does depend on the executive, but the majority of them want something short and sweet. Give me the bullet points. Let's, you know, I, I, I said this in my, my, my life. I probably don't say it enough right now, but in a discussion with someone, I, I need to start telling them more. And I have in the past of just get to the end of the story. So, you know, don't tell the story. Just, just present the, the end of it and what the ask is. So.

Speaker B: Well, I, there's something to be said that a client of mine turned me onto the book, uh, smart Brevity a few years ago, uh, six, seven years ago. And uh, wonderful book about that. Very comment, Nate. If I want to learn more and go into details later on, I can go into more details later on. Uh, and if I'm the writer and you're, if I, if you're my client, Nate, let me give you the two or three things you absolutely need. And then if you want to keep scrolling, I got more stuff for you but your answers in that first two paragraphs or those first two sentences. Smart Brevity is a wonderful book. I recommend it to a lot of people.

Speaker A: Yeah, I just pulled it up. So Smart Brevity, the power of saying more with less, I assume is what you're talking about. Uh, um, looks like a variety of, of um, authors on it. But yeah, I, that's, I mean we use that on a day to day basis. So we'll, we'll provide reports that are 70 pages long, the customers, but we'll consolidate an executive summary into one page. So just because who. I'm not reading 70. I mean that's, that's not happening. But you have that supporting detail. It's no different than, you know, any sort of, uh, uh, engagement that hits you either on the management consulting side or on, on your legal side. So, so you've been, um, you've been a general counsel for some time and then you decided to move and do Gras Group, which potentially your fractional general counsel. But what made you, um, want to build that firm? Uh, that's half law practice and half trucking consultancy. And who's your typical customer that you're working with?

Speaker B: Yeah, uh, so a couple different answers to that question in terms of the, you know, why do it? Um, Dart and the Orin family were good folks. It was a great experience. I had lots of wonderful time there. I was just ready for different, so ready to go pursue a different challenge. So that's, that's why I left. Then why'd I choose to form what I formed? In my experience in doing the industry events and talking with people in the industry a lot of times, there are a lot of very good lawyers in the industry. Uh, and I'm happy to give referrals to a lot of other good law firms. Um, the feedback I got a lot was we need someone who's going to cut to the chase, who can handle more of our day to day things and keep up with our speed of our business. Who as the client, Like, I don't understand what a truck and a trailer is. I don't have to explain what double brokering is or what cabotage is or any of these, these legal nuances of the trucking and the logistics industry. So they wanted that speed, that, that practical view. And then the consulting part of it was very similarly running into these trucking companies. You're like, hey, I need some help. I don't need it full time, but I need somebody who can come in here for a project to help Us clean something up. Maybe it's a turnaround or it's, I need someone to fractionally be here for X amount of hours for the next three months while we ramp up a new full time employee or something like that. Um, so our target market I uh, would say is probably that 80 or 100 trucks on the small side up to 1500 trucks on the big side. Like you said, we've got clients that are in the Transport Topics Top 10. We've got clients that have 35 trucks. But our sweet spot where we're really going to knock it out of the park I think is that 80 to 100 up to call it a thousand. 1500 somewhere in there.

Speaker A: Perfect. Perfect. Um, so I, I missed this earlier but George, thanks for, for watching. So I, I, I'm guessing that we're gonna have a pretty insightful conversation here. Whether it stays on track or another will be tbd. Ah. So, um, so in, in spirit of asking the last question or making the what's the most common blind spot when you start first working with a carrier? Um, what's the most common blind spot that you see at that organization?

Speaker B: So the relationship, My relationship with clients typically starts in one of two areas and that is they need help with an independent contractor program. Um, yeah, there's no getting around the fact that I've got a long history with dart and DART probably is most known for its owner operator program. So to the extent, uh, people see me as a one trick pony, I like to think I'm more than that. But to the extent I am, it's independent contractors. So a lot of relationships with my clients start with can you help me with my independent contractor program? Or it's something on the customer contract or vendor contract side. So, and I like starting there. I don't want to start with hey, call me to completely redo this big thing. We don't have a good enough relationship yet. I don't know all the dynamics, I don't know the risk tolerances. Those are really good areas to start small and start developing a relationship. So what do I see in those two areas? Um, the independent contractor program I would say in this word sounds worse than it is. Um, but, but I would say ignorance, obviously not in the certain terms of lack of intelligence. That, that's not at all what I mean. What I just mean is, oh, I didn't know Illinois had that requirement. I didn't know that Georgia requires the, the contract to have this specific sentence in it or that Texas requires a certain form. Um, it's Just that ignorance of. I didn't know that that rule applied to me. Um, so it usually is there. And the second part of that is the issue I see is typically in the lease purchase world, so to the extent the carrier's got a lease purchase program, um, there are a lot of good lease purchase programs out there. There are some that need a lot of work. Uh, and so usually there's some. We're spending some time in that space.

Speaker A: Yeah, fair enough. There's some that are just flat out predatory and they make it difficult on everyone else. So. And I mean I've seen some of the numbers where the numbers don't, don't function. So. But uh, uh, on the same hand, you know, I used to.

Speaker B: You're right.

Speaker A: So it was great. Go ahead. Sorry.

Speaker B: Yeah. And you're right about lease purchase program or just the nature of them? Like a lot of industries, 90% of the trucking industry is filled with wonderful people and companies just trying to do good work every day. But there is some junk, there's some bad actors. There's some junk in there. And those lease purchase programs and those junk companies are giving a lot of us bad names.

Speaker A: Yeah, absolutely. I think that's kind of a, um, thought everywhere, on all aspects. Anywhere that you can find some dirtiness in the industry. I think that applies to a lot of industries. But ours seems to be pretty vocal, right? Well, we have a tendency of being vocal and we are a very large industry. So you get, you know, X percent and you're talking a lot of people.

Speaker B: So, um, and, and we're a large industry and you know, we, we make the news. I mean a horrific car accident, we make the news and lots of bad stuff can come out.

Speaker A: Yeah, absolutely. Um, so kind of staying in line with the ic, uh, programs. So the Department of Labor make some changes. Potentially their, um, last ruling, I think 2024. Ish. Um, what, what's your thoughts on, um, kind of that, that landscape right now. Um, and what should fleets with IC programs be doing, um, based upon that. That change in the political field?

Speaker B: Yeah.

Speaker A: Great.

Speaker B: Ah, question. At the federal level, things are pretty good. Not great, not perfect. You can still have misclassification claim issues. At the Federal level, the U.S. department of labor still brings claims. I don't want people to have this false sense of security that because red is president or blue is president that you're guaranteed a certain outcome. It's not. President Trump and the first administration brought a lot of misclassification claims. President Trump's Department of Labor is still bringing misclassification claims. They do happen. But is there more sanity to it? Yes, definitely. If I am running an independent contractor program in trucking today at the federal level, I'm watching the, um, highway bill. The highway bill currently has language in it that would codify, well, honestly codify. It would require the Department of Transportation to pass rules about lease purchase programs. Folks might remember during the Biden administration, there was a truck leasing task force stacked with a whole bunch of people that don't like lease purchase programs that came up with a report about bad things that happen in lease purchase programs. It contains all of the things one might expect a report out of the administration from a few years ago to promote. And there's some truth in some of that stuff. Like we just said, there's some bad actors in the industry. I don't want to make it seem like everything's perfect. Um, but you can imagine how, where that report went. So be mindful of the highway bill. Watch out for what's happening there. Otherwise, I'm watching the states. Uh, it's states, it's cities, and it's. Again, it's not just the states you think of. Yes, everybody's going to assume that Illinois is a bad state or California or New York, and they are, they're bad states for independent contractors. But so is Montana. Um, Montana has some specific requirements. If you follow them, it's fine. But you have to understand how Montana works, you have to understand how Texas works, you have to understand how Arkansas works, North Carolina, and I can go down the list. Uh, I can spend a lot of time on that. But the gist of it is you need to be thinking about where do my contractors live, where do they operate and where are they dispatched from all of those states, whether that's one state or 50 states. You need to be cognizant of what their rules are about independent contractors, as you develop your program, review your contracts and so forth.

Speaker A: So how, I mean, generally speaking, how do with, with having to keep federal and then all the states, basically. So if you're running a regular route over the road fleet that hits, I mean, even 30 states, whatever your network is, um, you're talking about some pretty high level complexities there. How do you, I mean, from a strategy standpoint, how do you build an owner operator program that's durable when you, you know, states are changing, and states can change faster than the federal level in a lot of cases. Um, but how do you build that program? Or what's the foundation of it?

Speaker B: Yeah, great. Ah, question Ah, because. And we didn't even talk about cities. Uh, cities do this too. Uh, what, what I would do is you're going to try to build to the toughest standard. If you build to the toughest standard, and I should say this, the toughest standard that you're most realistic to deal with. Um, if you truly are recruiting contractors in all 50 states. Uh, and, and it is just as likely that Joe is going to spend time in California today as it is in Maine or as it is in Iowa. Okay. Then we got to build a program that probably works for the worst states.

Speaker A: Yep.

Speaker B: But in my experience, very few trucking companies really fit into that. A lot of them could. Like, okay, well, occasionally the guy might get to Idaho, but that's, that's really a one off situation. So I'd say, like, let's maybe not focus a lot on what Idaho is requiring. If your bread and butter recruiting, you know, market is this circle. Let's start with making sure we're good there. Okay. Now show me where your lane networks are. Then let's make sure we're good there and on down the line. Um, and then, yeah, shameless plug. Find the advisors.

Speaker A: Right.

Speaker B: Who you can rely on to look at these things. And what I would do is I would look at a couple of different things on my independent contractor program regularly. Look at turnover and look at, um, your economics. So forgetting how good your contract is and paper or whatever, I think back to an audit I did of a, of a client a lot of years ago. And I remember sitting down with the. It was a family owned business. Sitting down with the family after spending a week on site at their facility, learning everything I could about their independent contractor program. They said, what kind of grade would you give us? And I said, I'd probably give you like a C. Plus your contract's not that good. Your dispatchers don't really say the right things, and your safety department's probably a little overzealous, and your maintenance program I don't love and so forth. But if I'm you, I'm not overly worried about my misclassification risk because one, your contractors make a lot of money. When we look at our 1099s and you know, our estimated net settlement values for your contractors, you guys are making a lot of money. And number two, you have very low turnover, which probably coincides with them making a lot of money.

Speaker A: Sure.

Speaker B: So I would tell you, Mr. Trucking Company, if your contractors are staying and they're making a lot of money, they're Happy, happy people don't sue. Now, should we clean up some of these other things? Let's do that. But uh, my point is, if I'm a trucking company, I'm looking at turnover and I'm looking at pay on a regular basis to make sure I can say with a straight face that I'm economically providing a good program and the data backs me up because guys don't leave. Then separately, I'm talking with lawyers and insurance folks probably every 2ish years, maybe 3. Let's look at the contract again. Let's, let's make sure operations and legal are saying the same things and all that kind of stuff.

Speaker A: No, that's, that's fair points. I mean, obviously a business that has happy employees, happy customers, is typically a healthy business, even if they're not perfect. Right? So, um, so that being said, you know, um, kind of the last couple of points here on ICs, um, in a litigation standpoint. So on a not happy person who is suing, um, what do you see that is the typical sloppy habit that kind of hands a plaintiff the win?

Speaker B: Great question. M trying to think which one I would point to. What I would say is do not underestimate your public materials. And by that I mean your website and your advertising for owner operator opportunities and so forth. Um, people have way too much of a false sense of confidence on having a contract. I like to think I drafted a nice independent contractor agreement and there are other lawyers that draft nice ones too. If I draft you the world's greatest independent contractor agreement as ruled by all these judges in America, all that guarantees you is that you won't lose the case because of your contract. It's not going to guarantee you're going to win. It just means m, you won't lose because of something bad in your contract. Said oppositely, if you have a really bad contract, you can lose no matter what it is. Your contract's too bad. So what that means is your operations, your recruiting mean a lot more than your contract. So if you are a, um, if your website has lots of information about driving opportunities and for owner operators to apply for jobs here and into here are the benefits to owner operators. And you've got job postings for owner operators. But you're talking to them like drivers. You're not talking to them like independent business people, that stuff will get used against you. Same thing with the form that safety has them m sign after the contract says, but if it reads like an employee driver form, that stuff gets used against you. So I would say is one, one thing that. Probably the best way to say what's the one thing that gets them in trouble is they have way too much confidence in the contract and they don't pay attention to everything else.

Speaker A: Valid all, all great points. I mean, the devil's always in the details. And you know, unfortunately, optics plays a lot of, uh, uh, uh, or gives a lot of weight to these scenarios. So, I mean, you know, less is more in some, in some cases there, I imagine.

Speaker B: Yep.

Speaker A: Um, so we, we're, we're generally gonna avoid Montgomery versus Caribbean. But when we were talking about it earlier, just, ah, at least address it. Um, you said, you know, there's some people that you're talking to that are like, I don't want to go through this. So we're gonna start tapping out, um, or start looking at, you know, what it takes to, to unload our company or close our company. So, you know, sliding into the M and A side, um, deal activity is kind of picking up in 2026 after the long recession. Um, from where you sit right now, who's buying, who's selling, and uh, what's the decisions kind of driving those factors right now?

Speaker B: Well, it's easier to identify who's selling, I think.

Speaker A: Yeah, fair enough.

Speaker B: So the ones who are selling are the ones. One of two things. Um, one is they don't have a plan. They're out of gas. Uh, whether that's out of gas because they're out of money, out of gas because the owner doesn't have the energy into it, and there's just no plan. So they're grasping at straws, just trying to find their way out. There's a lot of gray hair in the industry. Not as much as when I started. Uh, but there is still a lot of gray hair in the industry. Um, the other type of seller is that person who is seeing a Montgomery decision come down, seeing this new regulation, that new tax, this new, whatever thing going out, just like, okay, I've got my horizon. I'll deal with this for another few years, but let's start figuring out what the future is for me and my spouse, my kids, whatever we need to get this thing ready for sale. Uh, on the buy side, I talk to a lot of people who say they're interested. I talked to a lot of people who love kicking tires, um, the people who pull the trigger, uh, who I would say to my clients that want to sell, like, that's who you want to buy. You are the organized ones. Um, and I'm not putting Numbers on in terms of. It's the ones that have X amount of trucks or the ones that have whatever. Because I see small companies buy other small companies, big companies eat small whatever. Um, but it does come down to how organized are they. Uh, if they have a plan, what they're doing, why they're looking at you, uh, what their plan is for financing and how they're going to turn a profit, uh with it once they get your, your business. Those are the ones who are doing very well in the market.

Speaker A: Yeah, absolutely. I mean I said this through the last four or five years, those that come out and are uh, well still have some sort of capitalization and haven't flushed every possible option are going to be the ones that are going to be acquiring others. Some, some of these companies looked ahead and started figuring out a plan several years ago. Some of them are always figuring this. I mean it's just their acquisition M and A is always on their uh, uh, their radar. But you know, more mid market organization that's not acquiring more than one company every two, three, four years. Um, certainly there's some ripe organizations out there that need to be led a little differently that frankly just could have did what they could to make it through this time and really you know, in all generalities were effectively out of business or approaching out of business months if not uh, years ago. Just didn't quite realize it.

Speaker B: So you're, you're, you're right. And a lot of clients of mine asked me like hey, we think we want to buy somebody. Great, that's awesome, let's go buy somebody. But to do what? Um, is it because you think you've got an operations team that is, that is kick ass and, and you can put them in place at another carrier and you can, and you can keep kicking ass down just bigger. Is it because you have really good cash and financing available and, and you're, you're, you're kind of just really good on the number side on the back end and, and you can do some things because you're really good at. This is an opportunity for you to, to, to gobble up equipment. Like don't just buy to buy. Like what is your plan? Right, Because I, I talk to some clients who like say hey, they want to go buy. I'm like, you have no bandwidth to put any of your existing team over in the new operation. So either you're going to be, you need to go find somebody who's got a good operation that uh, you're just going to now be the New investor. That's a different kind of buy then. Or you're gonna have to go hire a whole bunch of people because you don't have the bandwidth on your existing bench.

Speaker A: Yeah, absolutely. So, I mean, that assimilation is, is a, a big thing. Which we can jump into here in a minute. I think we're gonna take a quick break. Uh, if you have any questions for Doug, cue them up, shoot them in. When we come back, we'll go over those. Otherwise we'll jump back into the M and A discussion. We'll see you all in about a minute. If your fleet's downtime looks like chaos, you're missing out on GLCs. In the time critical world of trucking and logistics, every minute counts. Meet GLCs, your expert partner in managed IT and technology services. We integrate seamlessly with your team, bringing seasoned IT professionals with deep trucking and logistics expertise. Imagine yourself software updates running smoothly, complex issues resolved quickly, and operations humming with efficiency. GLCS has your back. Our support doesn't just fix problems, it prevents them. With our industry connections and proactive approach, we keep your trucks rolling and your brokers working. Think of us as the added resource your company needs to unleash its full potential. Visit GLCS.net today. Keep your business driving forward. GLCS, where efficiency meets expertise. And we are back. Uh, the, uh, that threw me off a little bit. Normally we have a longer one, but that's, that's all good. So um, so you know, a lot of folks are in that spot right now where they're wanting to sell or looking at selling. And it's may be induced by economics, but let's say you're starting to, you're that other side, which is saying, um, I don't like the, the rules coming down. The uh, industry for a variety of reason, reasons is getting far more complex than what it was 10, 20 years ago. Um, what would you recommend for an owner who's planning on selling, um, you know, two years ahead of time, um, what should they do to clean up their organization today?

Speaker B: It's a great question and I would say, um, there's two things they should be thinking about. The first is what's your story? Okay. And eventually, yes, we're going to get into numbers and assets and what you're selling and so forth. But the first thing you're selling is your story. A lot of times, whether at the very, very beginning, you're going to start handing out this one to three page document that explains something about your company and why the buyer should want you. Okay, so what is that story? What is that one to three page? What's the elevator pitch for your story? And a lot of trucking companies have this nice. We're a family owned business. We've been around for a long time. And it is a powerful story to that family and great. But it's also kind of a worn out story. Everybody's got it. What is your story? Are you awesome for your customers? Are you awesome for drivers? Do you have wonderful shops? Have you developed this niche in the wet Northwest that can't be beat? What is your thing? So that's number one, that what is your story that you're selling? Then from there, as you answer that question, you got to say, it's like, all right, now do you have the data to back it up? You say you dominate the Northwest and your customers love you. Okay, well now show me that you've had no turnover among your customers for the past X years. Wait a minute. You're saying you've actually lost four customers in the last two years? So maybe our story is not that we're this kick ass customer driven thing. You told me your story. Now let's start working on your data to back it up. So. And as you put together that data, you hit it on the head earlier on Nate, about the organization being organized, um, a member of the gro team, uh, he's a longtime CFO in the industry and he tells me the, the story of a, when, when he was in house cfo, um, of selling a very large company, uh, multi, you know, a couple thousand trucks. And he went through, he and the CEO went through the very initial conversation with a potential banking, uh, uh, outfit to help them sell through the day of closing. And I think he said three people knew it.

Speaker A: Oh, wow.

Speaker B: Because they were that organized, he didn't have to go get 15 people assembled for a team and say, go find me this, go find me that, Go. Whatever. It was their normal course of business that they knew where their contracts with their customers were. They knew where their contracts with their vendors were. They knew their employee data, they knew their driver data, they knew their loss runs and their claims. Like, it was just, we were organized. The corporate stuff, the legal stuff, the finance stuff, the personnel stuff, we were organized. So I didn't have to send off all these alarms because there are a lot of owners I do talk to. They're like, I think I could tell Susie, but I don't think I could tell Bill. If Bill. I kind of need some information out of Bill but if I tell Bill, then it's going to go to six other drivers and then it's going to go to four mechanics. And now I got it everywhere. Getting or knowing your story, figuring out what data you have or does your data back up that story and then getting organized. If you're really good in those three areas, whatever your business was worth, you are going to get more. You're going to get a premium because you got a lot of competitors trying to sell that might be able to do one of those that definitely can't do all three.

Speaker A: Sure, yeah, I can agree with that. I mean, so first off, that's very odd in any sort of discussions I've been involved in M and A that you'd be able to contain that large of an organization to such a small group of people. But so kudos to whichever, whichever organization that was. Um, but ah, it's absolutely true. And a lot of, a lot of companies that we work with is, uh, on, on our side. You know, let's talk about contracts. And the contracts are scattered all over the place. Um, or potentially they're in one receptacle, but they're not well defined. So you still have to, I mean, great. There are. We know they're all here, or we think they're all here, but we have no great way of interacting with them. So on the flip side, you know, a, ah, company thinking it's maybe time to sell for a few years, getting organized. On the flip side, though, um, not quite on the flip side, I'm gonna ask a different question instead. So, uh, you've done your due diligence, you're at the table whether you're at the last day or within 30, 60 days. What typically will kill a deal there?

Speaker B: Well, I mean, surprises. M. If you're going to say one word, it's surprises on either side. Uh, so the, the buyer surprising the seller by like, oh, apparently we don't have the money we thought we were going to have. Um, or something is happening in their core business that is tying up their resources or whatever. Because surprises can happen on the buyer side. It's not just bad things on the seller side. Um, otherwise it is going to be as, hey, wait a minute, Joe, uh, you told me all the way along that this was your customer base, that your customer base was solid, that your driver base was solid and all that kind of stuff. We don't expect 100% of everything you promised to come through because we're realistic. But hey, I'm seeing customers go away. I'm seeing the fleet shrink every month. Um, oh, by the. There's an oh, crap accident. Uh, that, that's got mega liability exposure to it or class action misclassification claim just got dropped. So I would say that the biggest things would be surprises. And part of that isn't just that something happened that causes a surprise. It can also be, well, why didn't you tell me that six months ago when we started these conversations? That's not the way you couched it. Why didn't you couch it this way? And again, that's a two way street. Why, Mr. Buyer, didn't you tell me that your plan was to sell off my terminals to four different other carriers? It is important to my legacy that we keep this thing together. Um, so surprises, that's what kills deal.

Speaker A: Yeah, yeah, great example. I remember buying a carrier 20 years ago and uh, we were well down the road actually. We had propped them up to keep them in business. And when they found out that uh, I'd say 80 to 90% of their people were not needed and we were going to be parting ways with them in a short period of time, the current owners did things that I probably wouldn't have done, but they, they kept the business because they, they were worried about everyone, uh, not having roles that they had worked with for the majority of their life. So uh, you know, that, that's on our side, that's a deal breaker. We're not going to take on uh, ah, office staff we don't need. On their side. They couldn't handle the, the emotion and the, the issues related with that. So, um, but, but I mean that, that kind of brings us into, you know, sometimes. Uh, do you see any first time buyers out there right now? People who are like, I want to buy a trucking company. Maybe they've been in operations, maybe they've had the role, they have access to some cash. Um, do we see any of that happening yet?

Speaker B: Well, I am seeing some private equity thinking they want to be in the trucking game. And there are some.

Speaker A: It's been for a while, so they've been in. But yeah, you're right.

Speaker B: But I should say I've seen some new ones. Okay. Uh, trying to come in. Um, so some of that I would definitely caution anybody against it. It's, it's not the, the, the, the place to buy your first business. That, that's for sure. So I would say in general, not as much as I saw. I'm thinking of a deal, uh, that I worked on five years ago, four years ago, where that was a longtime business owner, but his true first foray into trucking, uh, and helping him navigate that, that purchase, um, was, he was a very smart guy and he's, he's doing a good job uh, with that business. Um, but that was, that was interesting. Just again, smart guy, but just doesn't, didn't know anything about trucking. And again, he's done a good job. There was a lot of educating to go along.

Speaker A: No, valid, valid. Um, so I'm going to roll in now to corporate governance and the reason why I'm going to pull that forward, uh, because normally I wouldn't talk about it because I imagine half of our, half, um, of our listeners are glazing over when we start talking about how to structure a company. But several business owners in just the last few weeks have brought it up. And um, so you know, when you look at 100 or 200 truck fleet and how they're, they're structured, um, what's kind of the most important thing for them to consider there?

Speaker B: So I, I can answer with, with two things because I put them on par with each other. Um, is I am generally a fan of. For each business unit business service offering. I've got, I want, I want a legal entity for that. Now I don't mean if I've got dry van and I've got uh, dry van expedited and dry van dedicated, that I need three different legal entities. Because of the, the nuances of my dry van opportunities, I don't know that I need legal entities. But if I've got trucking retail shops and brokerage, I think that's probably three different companies. Sure.

Speaker A: The specific on that though is retail shops.

Speaker B: Yeah.

Speaker A: If you were not retail and you were only working on your own equipment, would you call that similar or. It wouldn't.

Speaker B: I think it's a little bit, I think it's a little bit more debatable. Uh, I probably want to say let's, let's talk about more about what's going on in that shop. Um, there's some environmental issues like, okay, what are we dealing with? Uh, in terms of, um, you know, virtually any kind of shop is at least going to have some oil and fuel. But like, what kind of environmental exposures are we dealing with in this shop? It might impact a little bit of that answer. Um, and I would also say my definition of retail includes your independent contractors. So if you've got independent contractors and you're doing work on their trucks and presumably you're charging those contractors for that Repair. I would say you're a retail shop.

Speaker A: Okay.

Speaker B: Um, so. But, but yes. And I feel more strongly about it to the extent you're retail.

Speaker A: But no fair. Oh, go ahead, go ahead.

Speaker B: Equal to having the separate entities is aligning your administration, your finance, your accounting with that legal structure. I tell folks all the time if a client wants to talk to me about how they should structure their businesses, I say, do not listen to everything I say. If you do everything the way the lawyer wants it, it's probably going to be overly complicated. And then so let's bring in the accountant and the tax people. And if you do everything the way they want it, you're going to have probably a little bit of an extreme result too. So you want to balance us, but don't just go based on the professional advisors either. Now let's bring in the operations gal because she's the one that's got to actually run it on a day to day basis. So make sure she's got a seat at the table to say I can't realistically manage everything that these lawyers and accountants are telling me to do. So I would say, Mr. Mrs. Owner, you need to look at all three of us, take everything we're saying with a grain of salt and hear us all and find something that works for you. Balancing everybody's interests. You don't want to get too complicated. I'd love to talk to you about the 16 different entities I think GLCS should have. But you don't want that. It's not a good result for you.

Speaker A: Right, right. No, a hundred percent. Um, and that's typically the conversation that I have is, you know, between attorneys, accountants, um, insurance companies, uh, you know, or advisors from insurance companies. What do companies actually need to do? You know, one, one of the things that I have conversations with, uh, them about is okay, you have all these different entities, but if you have an employee, employee that works in all of them, is that really worth creating the entities when you're puncturing that, that corporate veil?

Speaker B: Easily so great, great point. That's where I say you've got to have alignment. So if you're going to let the lawyer form six different entities, make sure the accountant is prepared to do accounting work for six different entities.

Speaker A: Right.

Speaker B: And make sure you've got shared services agreements that HR is managing and, and all that kind of stuff so that you're dealing with exactly the situation you just mentioned. Otherwise you have donated a lot of money to a lawyer's charitable cause.

Speaker A: Yeah.

Speaker B: Uh, because that's all you've done, you haven't actually protected yourself.

Speaker A: Uh, the kicker there is the shared services agreement. You know, so if you have a safety HR department that's going to administrate all your companies, then they have an agreement with the companies that they're going to administrate them. So. And in some cases larger entities, you'll have the people. All in. All in some sort of, uh, entity as well.

Speaker B: Correct.

Speaker A: So, so what's a, uh, uh, real world example of where governance has saved a company, or at least saved them some significant pain? You don't have to name the company, of course, but.

Speaker B: Yeah. So, uh, I would say I've got two examples of that. One is the, the standard motor vehicle accident. So the motor vehicle accident occurs and the plaintiff lawyer wants to sue the trucking company, they want to sue the shop, they want to sue the, um, the finance company, the shared services company. Everybody that they. Any brand name that they can. They can.

Speaker A: Yeah.

Speaker B: Every find anywhere.

Speaker A: The trailer manufacturer.

Speaker B: Correct. It's just saying within. Yeah, you're. Yeah, that one's a little bit of a crazy one. But just within your own world. Just within your own world, they want to sue every entity they can find. And you know, I've been a part of cases and help clients navigate cases where we're able to say, wait a minute, this, this management company, uh, this shared services company, they're different. They are not controlled the same way. It's got their own corporate record books, it's got their own account accounting records. It's got. In one example that I'm thinking of, it had different employees, but I've also had cases where we were successful and they had shared employees. But you're able to show an agreement, the shared services agreement. Corporate records not just formed in 1976, but regularly kept up to date. Okay. Accounting records to back it up. And last but not least, an easy explanation for what the company does. You can't outsmart yourself. Meaning if you've got shared services company, you know, administrative services company, most people can understand that if you have four holding companies and you're trying to differentiate between the four holding companies up a chain, it gets really hard to discern to explain to a jury the difference between number three and number two. So don't get so complicated that you can't just explain it to a layman what this company does.

Speaker A: Perfect advice. So appreciate that one. Did you have a second one that you were gonna.

Speaker B: Yeah. The other one that comes up and this really gets into the rules of your companies. And that is the family ownership. Okay? And I guess it doesn't really have to be family. It's just any. Anytime you have more than one owner, once you have. If you form a company today and you're a solo owner, a lawyer or legal zoom or whatever is going to give you. Let's assume for a moment you're going to form a corporation. So they're going to give you some bylaws, and those bylaws are going to be 6 to 26 pages long and have a whole bunch of stuff about how meetings get set and who gets to vote on what and whatever. And none of it matters because you're the only owner, okay? But the moment you bring on a second owner, that stuff actually starts to matter. And everybody at the beginning of the business loves each other. We're great. We're going to. Nate and I are going to get along great. I have no issues. I trust Nate implicitly. We're good. And then six years from now, I'm like, nate loves trucks. He always buys trucks. Why we keep buying trucks. I wish we weren't buying so many trucks. And now Nate and I are starting to have our friction. Now these rules are going to start mattering because these rules are going to impact. Let's. Let's say in my. My. My farcical example here, Nate owns 70% of our business and I own 30%. Those rules are going to govern what records Nate has to. Let me see, okay. In some states, he doesn't have to let me see everything because he owns more than I do. Okay? These rules are going to govern whether or not I always get to vote on something, even though I'm 70, 30. Am I always going to be outvoted? Or is there a scenario where I can get one. One person on the board that's. That's kind of controlled by me? Um, how do I sell? Can I force Nate to buy me out? All of that stuff starts to matter. And again, every time you add a generation, every time you add a divorce, a marriage, an adoption, any of those types of things, a new executive that's maybe not in the family, but we all really like Susie. She's fantastic. We want to reward her with something. All of these rules start to matter. Um, so I tell clients, because I do help companies form at the beginning. And I say is, we can either do the quick and dirty cheap version, and that's fine. I don't object to that. But let's put on our calendar a year from now that we're going to Spend more time on this and revisit this and start thinking about whether or not your spouse is going to be involved in the business or whether or not the kids are coming and the kids are going to be involved, or your sales guy that's done wonderful work for you needs to be rewarded in some way.

Speaker A: Perfect. Perfect answer. I know that that kind of segues me, but we're probably going to run out of time, um, on the family management and ownership generally. Um, you know, so much of the industry is family business, and that's becoming more and more. I mean, as we continue to build our relationships with more and more companies, uh, you know, we get close to those family members in many cases. Um, so what would you say is a success? And there's a lot. So you had alluded before, there's less gray hairs, which I would say white hairs, uh, and in the industry now than there was maybe 10 years ago. And we're seeing some of these trips, transitions, if not happen in stock, they're happening from an operational level because mom or dad is, is retiring. And you know, but what, what would you say separates the transitions, um, good transitions from bad transitions, you know, defining kind of a good transition. Um, what, what are you seeing out there happening?

Speaker B: So the, the, the best transitions are, I don't want to say 100% transparent, but they're much more transparent than they're not. Meaning, um, of course, let's just assume mom and dad, you get, you got three kids. It's, uh, two daughters and a son, and they're all married. Mom and dad do need to have some amount of private conversation just among them, them. But mom and dad need to be more open than not with their children about the things they're considering. And they need to consider mom and dad's input. The kids impact because sometimes you might get surprised at what you hear from the kids. You, you might get a, a son that says, I don't really want to be in the business, dad. I'm doing it because I like working with you. But if you're going to retire, I, I don't want to keep being here either. I want to go do something different. Can we all get out? Um, you might get surprised. So number one is be more open than not. Um, I see mistakes when clients just, they don't want to talk about it, they don't talk about it, they won't talk to their kids about it, that kind of thing. So that's number one, and number two is you're not solving it in one meeting. Don't even try to think you're going to solve it in one meeting. It's going to take a lot of time. Uh, don't try to do it in a weekend. Don't try to do it in, you know, rush it through, Be thoughtful about it. Let it take three, six months, and put together a thoughtful plan with tax in mind, legal in mind, and one or both of those people having a good feel for the dynamics of the organization. Um, what the company needs, what the family needs, and to the extent I tell people a lot of times is we can separate what to do with the money from what to do with the company. And because they don't have to be aligned.

Speaker A: Yeah, perfect point. I mean, you kind of have to figure out what you're going to do with the company, uh, before you. Well, um, probably before you figure out what you're gonna do with the money. So. Um, true.

Speaker B: But if you're thinking is, hey, I just want to make sure all the kids end up with 3 million bucks a piece. Okay, well, do all the kids have to get 3 million bucks apiece out of the company? Are there other assets that we can play with? Are there other ways to get 3 million bucks but not strip the company of $9 million?

Speaker A: Sure. Yeah. No. Fair. Fair point. So last quick question. You got about 40 seconds to answer it once I deliver it. So, uh, um, if a company can. Can do something in the next 12 months, uh, what this is just generally what should they look at? And sure. That they're comfortable with. Um, uh, just generically. I mean, the most important thing they need to pay attention to.

Speaker B: I'm going to put on my consultancy hat to answer that question. The biggest issue that we run into with clients is lack of alignment, misalignment. Um, they say one thing at this level, that they want to do these things and be this way and all that kind of stuff, but then by the end of the day, they've made four decisions that are not aligned with what they said at the 8am meeting they want to do. Focus on alignment.

Speaker A: Perfect. So, Doug, I appreciate that one. I see the exact same thing. So lots of times the companies are getting pulled in different directions based upon everyone's desire. So, um, where can people find you if they want to reach out?

Speaker B: Yeah, I appreciate it. Uh, the easiest way is probably via email. Doug. Gr that's G R A W Era group dot com. The website is the. The GR group dot com. So, um, thank you very much for the opportunity, Nate. Really enjoyed the discussion.

Speaker A: Absolutely. A breezed by and I didn't get through most of my question. I got about three. Half of them just to. To put that out there. So, Doug, appreciate you coming on. Look forward to chatting again soon. All right. Nobody gets into trucking because they, they love the paperwork, they love the legal side of it. They, they. You get into it because you love the work, you love the people. Um, and, and you just generally love the industry. Um, so what we kind of take, uh, from this conversation is that companies that, that, that make it usually don't necessarily just run out because of their, their decisions operationally. Um, they can, they can struggle. Uh, companies that don't make it usually don't, don't find their, uh, it may not be an operational issue. They may be something that's, that's, that can be resolved in the fine print. So the contracts that nobody reads, the succession plan that nobody wrote, um, the alignment between the people involved, uh, an independent contractor program that's, that's one lawsuit away from disaster. Um, an operating agreement that, that, you know, everyone fought over over a period of time that really, what didn't represent the best, um, best position for the company itself. So three, four years of this. Uh, the freight market has, has most m. Significantly thinned the herd of companies out there. Carriers still standing today, uh, they didn't just outwork everybody. They, they out prepared them and some better than others. Um, so, so do something with what you heard today. Pull out those contracts, have hard conversations with your family and get your house in order before somebody else does. And you know, that's a, that's a pretty strong statement, but you know, uh, don't allow a, a, uh, lawsuit to cause you to get your house in order. That's probably too late. So get it in order ahead of time, whatever order that may be. So once again, thanks to Doug Groff for coming on. Stay curious, stay informed, and keep pushing the boundaries of what's possible until next time. Drive forward with purpose and innovation. Thanks for watching.