What is a taxi fleet worth?

A taxi fleet can earn from fares, from dispatch, or from leasing cars and licences to drivers, so ask which of these the revenue comes from. A buyer pricing one has to work out what actually changes hands. A car is a separate item from the right to run it as a taxi. Who issues that right, and whether it can move to a new owner, is decided by a regulator and not by the seller. In British Columbia a provincial board does it. In Québec, under a provincial Act, the Société de l’assurance automobile du Québec authorizes each car and the Commission des transports du Québec authorizes transportation systems. In Toronto the City’s business-regulations page lists a municipal operating licence for taxicabs. Value follows from that starting point.

Start with what can transfer

The Passenger Transportation Board in British Columbia says taxi operators must hold a passenger transportation licence with special authorization. It also says operators can apply to transfer a licence to another business entity, and that both the transferor and the transferee must apply to the Board for approval. If the transfer is approved, a new licence is issued in the transferee’s name. Ask whether a licence can be counted as part of the price before that approval is in hand; a fleet whose licences cannot move at all is a different purchase from one where they can. In every city, ask who issues the right and what the transfer process is.

Fares may not be the owner’s to set

The Board also states that taxi operators in British Columbia may only charge rates approved in writing by the Board. Where that is the rule, a growth plan built on higher fares depends on a regulator’s decision, not on the buyer’s. Ask the seller where growth would come from if it cannot come from higher fares. Ask the seller which body sets fares in each city the fleet serves, and how recently the approved rates changed relative to the fleet’s costs. The answer shapes how much of the current earnings a buyer can treat as repeatable.

How the drivers are engaged

Fleet income can come from drivers who work for the company, from drivers who lease a car or a licence, or from a mix. The Canada Revenue Agency describes an employee as generally working under the direction and control of whoever hired them, without normally having the chance to make a profit or suffer a loss, and describes a self-employed worker as under a contract for services, free to choose how to carry it out. Ask whether the drivers’ status affects labour cost and what a buyer would inherit, and ask how that status was decided and whether anyone has questioned it.

How earnings get recast

BDC says a valuator typically reviews a variety of records, including financial statements. For a fleet, ask for the earnings of each car, not just the total, and look for owner benefits that a buyer would not carry. An owner who drives a shift, relatives paid above or below what a replacement driver would cost, and personal use of a company car are the items to ask about. Each is a candidate add-back only if it is documented, so ask whether the records exist for each.

What makes similar fleets differ

Two fleets with the same revenue can differ in what a buyer can rely on. One may hold licences that can transfer and the other may not. One may rely on a single airport or hospital account, which raises customer concentration and raises the question of whether that agreement can be assigned. One may have cars that no longer meet a rule: the British Columbia Board has posted that analogue taxi meters are no longer permitted, an example of an equipment rule that changed. One may have drivers who work for the fleet only because of the owner’s personal relationships.

What a buyer can test

A buyer cannot value what it cannot see, so the evidence matters as much as the numbers. Ask for the licence file, a schedule of cars with their registration and equipment, the driver agreements, and every contract that supplies a steady source of trips. If an agreement with an airport, hospital or corporate account is a large share of revenue, ask for a copy and read its termination and assignment clauses. A seller who can document each item gives a buyer more to rely on than one who describes the business well but cannot produce the paper. An accountant or a business valuator can tell you what else they would need.

• Which licences, plates or authorizations does the fleet hold, and which body must approve a transfer of each?
• Who sets the fares, and what share of revenue depends on a single contract or account?
• How are the drivers engaged, and is that status documented?
• Which cars and equipment must be replaced to stay compliant, and who bears that cost?
• Which earnings depend on the owner personally?