A Q&A About M&A in the Towing Industry

🔎 In this article: explore why towing and recovery companies are increasingly bought out and learn about the merger and acquisition (M&A) process – whether you’re considering a sale or planning to stay independent. We’ll cover topics like: how to sell a towing company, towing company valuation, and towing business exit planning advice.

Consolidation. Mergers and acquisitions. PE. You've probably heard the hum of these buzzwords at a recent towing industry event, trade show, or conference you've attended or tossed the term around with colleagues at 20-group meetings or after-work gatherings. Maybe someone shared a story about a competing towing business recently sold to a regional conglomerate, or there's a private equity group sniffing around in your area.  

Why? Because it's a growing trend. Private equity-backed operators are actively building regional towing platforms through acquisition. For example, in July, FirstLine Road Solutions, a Seaside Equity Partners-backed platform, expanded into Central Texas by partnering with SAS Towing & Recovery, Texas Truck & Trailer, and 7Pete's Environmental, continuing a roll-up strategy that has added more than a dozen independent operators to its network since 2022.

But even as this trend grows, the towing and recovery industry remains relatively fragmented compared to others. IBISWorld's March 2026 industry report shows the U.S. automobile towing industry is made up of just under 40,000 businesses generating roughly $11.8 billion a year. The report also shares that no single company holds more than 5% market share, suggesting that towing is still – overwhelmingly – an industry of independent operators and family-owned businesses.  

That's, in part, why there's more acquisition activity... the as-yet untapped potential is there and larger companies and investors recognize the opportunity.  

Since consolidation and M&A in the towing industry were major topics that surfaced in our 2025 State of Towing Report (P.S. look for this year's report coming soon!) and a trend we've been watching, we are sharing a post that dives into what the towing business exit process looks like, from valuation and due diligence, to asset purchase agreement, transition period, typical timeline, and pitfalls that can trip up sellers.  

RELATED: Did you miss last year's State of Towing Report and want to read it in full? Email hello@autura.com to request your copy today, and look for this year's edition coming soon!

Read on for tips on how to start preparing your business now, even if a sale is years away, and save our shortlist of dos and don'ts. And for towing business owners who plan to remain independent, you'll gain some insight about how to compete against scaled-up, investor-backed companies.

🎧 Listen to our companion piece about M&A and the process of selling a towing and recovery business – Tow Trend Podcast hosts Dennis McGowan and Shelli Hawkins interview guests Michael Lampert and Ben Gaines from New England Truck Center (NETC)

Q: Why Are Towing Companies Getting Purchased?

A: There are a few contributing factors causing more interest in purchasing towing and recovery businesses:

1. Independent towing company owners who started their businesses years ago are nearing retirement age. Many don’t have a next generation ready or wanting to take over the business.  
2. Investors and private equity (PE) are attracted to businesses that have steady, asset-backed revenue. That describes a lot of towing and recovery businesses with municipal and private property contracts, real estate, and specialized equipment.  
3. Towing and recovery work is, by nature, a local relationship business. That means it’s hard to break into and grow organically – it’s much easier to buy a business with existing community relationships, name brand recognition, and trust.

None of that means every towing company is a target, or that selling is the right move for every owner. It does mean more owners are getting calls and more brokers are actively looking within the industry.

Q: What's the Towing and Recovery Business Exit Process Like?

A: Selling a towing and recovery business is a process with key stages and aspects, taking place over time. Here's a quick overview:

Valuation

Buyers and brokers typically value towing companies using a multiple of revenue or seller's discretionary earnings (SDE), and sometimes EBITDA for larger operations.  

According to BizBuySell's towing company benchmark data (covering transactions through 2025), the median sale multiple has been around 0.85x annual revenue or roughly 3.16x SDE, with a median sale price near $1.35 million.  

Other factors that PE and other potential buyers of towing businesses look at include:

• Contract mix (municipal versus private property versus roadside)
• Fleet age and condition
• Owned versus leased real estate
• Customer concentration
• How dependent the business is on its current owner

It may surprise you how much that last point matters. A business that runs well without the owner in the truck or on the phone every day is worth more in the eyes of investors – and will likely sell faster.

Due Diligence

After a towing business owner accepts a letter of intent, the buyer's team will dig into the company financials, contracts, equipment titles, insurance history, safety and compliance records, and any municipal or private property agreements, exploring whether and how they can even be transferred to a new owner.  

⚠️This is where deals often get delayed or fall apart. Why? Typically, because business owners neglected to keep complete, consistent records. Or maybe they did keep records – but scattered across paper files, spreadsheets, sticky notes, and in someone's memory.

Related: Find out how cash that's not accounted for or lack of accrual accounting can impact a buyer's decision about whether to pursue purchasing a towing business in Episode 8 of The Tow Trend Podcast

The Asset Purchase Agreement (APA)

Most towing business sales are structured as asset purchases rather than stock sales. That means the buyer acquires specific assets (in context of towing industry this means trucks, equipment, contracts, customer lists, real estate, etc) rather than the legal entity itself.  

The APA for a towing business specifies things like:

• What's included and excluded in the business sale
• How the purchase price will be paid (i.e. cash at close, seller financing, an earnout tied to future performance)
• What representations and warranties will be made  

The APA is a legal document, which can feel intimidating and overwhelming to create and review. To mitigate concerns, speak with and, if possible, work with an attorney that specifically has M&A experience versus just a general business attorney.

The Transition

This is the part of the selling process that towing business owners who are selling tend to underestimate most.  

During this transition period, current owners help onboard new owners, introduce them to key customers and municipal contacts, and help retain drivers and dispatchers who might otherwise leave when they hear "the company sold."  

The more a business runs smoothly without the owner personally managing daily operations, the more appealing it is to buyers. It eases the transition period and helps ensure that current operations, teams, contracts, and revenue sources will stay stable and in place as the business changes hands.

The Typical Towing Business Sale Timeline

There's no good way to answer this. The time it takes to move from first conversation with a buyer or broker to closing is vastly dependent upon many factors that vary based on region, business size, customer base, contracts in place, documentation practices, legal standing... the list goes on.

Historically, straightforward deals take between six months and a year, and longer if municipal contract transfers or complex real estate are involved. BizBuySell's data shows towing businesses spending a median of 226 days on the market before selling, and that's before due diligence and closing start.

Q: What Are Common Towing Business Sale Pitfalls?

What makes a deal fall through? What are the red flags that PE, investors, partners, and acquiring businesses look out for when vetting potential portfolio additions?  

A: Here's a hitlist of things to clean up or avoid if you're entertaining the idea of selling:

• Financials that don't hold up under scrutiny: blurring the lines between personal and business expenses
• Non-transferable contracts
• High employee turnover
• Lack of documentation across business processes, accounting, tool and equipment purchasing and maintenance, etc.
• High insurance claims
• History of litigation

How to Prepare a Towing Business for Exit – Now or in the Future

You don't need to be actively selling (or even want to sell) to find value in this next section. Following some of the advice here and from experts like our guests in The Tow Trend Podcast episode 8 are good business practices – no matter your goals.

1. Completely separate personal and business expenses and keep at least 2-3 years of clean financial statements.  
2. Move dispatch, billing, invoicing, and impound records into a system that produces reportable, auditable data instead of relying on paper tickets or someone's spreadsheet.
3. Enforce use of written contracts (versus verbal agreements) for anything recurring, such as municipal rotations, private property lots, and fleet accounts.  
4. Cross-train employees where possible so that no one person, especially you, is a single point of failure for dispatch, key accounts, or equipment knowledge.  
5. Keep current, accessible fleet and equipment maintenance records.

Every one of these steps also makes the business easier and more profitable to run today, whether or not you ever sell.  

7 less obvious "dos" and "don'ts" include:

1. Do get your financials reviewed or cleaned up by an accountant, even if you're years away from selling.
2. Don't wait until you have a buyer to determine what’s legally in your name, your Dad’s name, your wife’s name, your business’ name – like vehicles, real estate, equipment loans, etc. This is especially tricky in the towing industry where so many businesses are family-owned and have been passed down through generations.
3. Do find out now whether your municipal or private property contracts can be assigned to a new owner, and under what conditions.
4. Don't assume a handshake understanding with a longtime customer or municipality will survive a change of ownership. Put work agreements in writing.
5. Do document, streamline, and automate (where possible) your processes so the business can run without you. If it can't, buyers will notice and will price accordingly.
6. Don't talk about a potential sale to your team or others too early. Choose key people to keep in the loop and maintain a tight circle of decision-makers and stakeholders until details have been solidified.
7. Do talk to a business broker or M&A advisor who has actually worked with towing companies before you talk to a buyer.

Q: What Are Good Strategies for Staying Competitive as an Independent Towing Business

Business owners who want to remain independent may be concerned about what consolidation is doing to the competition in their market. That's a legitimate worry, but there's great news: larger operations with bigger budgets don't hold explicit advantage over smaller ones.  

A: In the business arena, independent operators win based on aspects of business that can't be manufactured or bought, like:

• Long-standing relationships with dispatchers, law enforcement, and property managers who know exactly who to call
• Flexibility and control over business operations and decisions that allow you to say yes to a 2 a.m. job or special circumstance without submitting a permission request that goes to a regional manager three states away
• Reputation built up over years, and the growing movement to support local and keep money within the community.  

And if those are your strengths, then reporting and technology tend to be the weaknesses to work on that will help you stay competitive. Larger, consolidated competitors typically run on modern towing management software giving them clean data for municipal bid responses, faster invoicing, and better visibility into fleet utilization.  

If your bid packet still relies on manual recordkeeping while a competitor is submitting standardized performance data, it's a disadvantage that has nothing to do with the quality of your service.

3 Things that Help You Win Towing Work Against Bigger Competition

1. Diversify revenue so you're not dependent upon a single contract or referral source. Read our earlier piece on how smart towing business owners diversify revenue for specific ideas.
2. If possible, invest in digital dispatch, billing, lien processing and notification, and impound auction management tools that smooth business processes, increase efficiency, and support your ability to do more work at competitive prices.  
3. Where it makes sense, explore buying cooperatives or referral networks with other independents rather than going it alone against a bigger balance sheet.

The Bottom Line

Whether you're considering selling in the next few years or planning to stay independent for the long haul (pun intended!), good business habits pay dividends. Keep clean records, document processes, and invest in technology that gives you (and any future owners and/or buyers) confidence in the numbers.  

Disclaimer: Autura does not provide legal, financial, or tax advice. You should consult qualified experts in the field of law, accounting, and tax before making any decisions or changes.