What is a last-mile delivery contractor worth?

A last-mile delivery contractor runs cargo vans or light trucks for a retailer, marketplace or courier network and is paid on whatever basis its contract sets, such as per route or per stop. A buyer looking at one is buying more than the vans. Vans can be replaced. What a buyer cannot simply replace is the right to keep running the routes, and the drivers who already know them. So the worth question has three parts: how secure the contract is, what it really costs to perform, and how much of the reported profit would survive a change of owner. This guide covers how value is read in this sub-sector. It gives no figure, because nothing here can be turned into a number without your financial statements.

The contract is most of the asset

If the contract with the platform or retailer carries the revenue, its terms may matter to value more than anything on the balance sheet. Read its term, its renewal mechanism, how either side can end it, who sets pricing, and whether the platform can reassign routes or territory. If a contract can end on short notice, a buyer may be acquiring only a short stretch of cash flow, so ask how long the revenue is actually committed. Ask for the whole agreement and every amendment, not a summary from the seller. If the contract is silent on a point that matters, treat that silence as a risk to be priced, not a gap to be assumed in the seller’s favour.

One customer can discount everything else

A contractor may serve a single principal customer, so check how much of the revenue comes from one source. If the contract has no long-term commitment, or lets the platform terminate on a change of control, the buyer may be acquiring a relationship that could end on short notice. Ask how many platforms or retailers the contractor serves, since reliance on a single one is the risk to understand. Our glossary entry on customer concentration explains the term, and a seller may lower the discount by showing the dependence is smaller than it looks.

Recasting earnings when the owner drives

If the owner runs routes or dispatches in place of paying someone to do it, reported profit includes unpaid labour. Ask what a replacement manager or driver would cost, and ask how a buyer would adjust earnings to match. Adjustments can run in both directions: personal expenses run through the company can be added back, and labour the owner supplied for free can be deducted. The glossary entry on add-backs sets out the first half. For the second, ask what the business would look like if the owner stopped working in it next month.

Drivers change the cost line, and the classification matters

The Canada Revenue Agency says an employee generally works under the direction and control of the person who hired them, while a self-employed worker is free to choose how to carry out the contract and is not under the payer’s direction or control. If drivers are paid as contractors but the platform’s rules shape their routes and conduct, ask what the earnings would look like with employee costs included, and have a lawyer assess the classification. Either the worker or the payer can ask the CRA for a CPP/EI ruling if status is unclear. Ask the seller how each driver is paid and on what documents.

The fleet sets when the next large cheque is due

Two contractors with the same earnings can differ in worth because one has a fleet bought recently and the other has vans due for replacement together. Ask for the purchase date, mileage and ownership or lease terms of each vehicle, and when replacement falls due. Weight also matters for the rules the fleet falls under. In Ontario, the commercial vehicle operator’s registration (CVOR) applies to trucks plated in Ontario, the United States or Mexico over a weight threshold set by the province (registered gross weight or actual weight), and not to some lighter trucks, and the program monitors and evaluates operators’ safety records. Transport Canada says regulations governing commercial vehicles, drivers and motor carriers across Canada are based on the National Safety Code standards. Ask whether any collision or inspection record exists and whose registration it sits under.

Why similar contractors price differently

• The length and renewal terms of the delivery contract, and whether the platform can end it on short notice
• Whether the business serves one principal customer or several
• How much of the reported profit depends on the owner personally driving or managing routes
• Whether drivers are treated as employees or contractors, and whether that treatment would hold up
• How the fleet is aged, owned or leased, and whether replacements fall due at the same time