Buying a courier or delivery business: what to check
Short answer
When buying a local courier or delivery business, verify revenue by customer from invoices and dispatch records, and read the contracts: many couriers rely on a few shippers (pharmacies, labs, medical offices, law firms, parts distributors) under agreements that can end on short notice. Check driver classification (employees vs independent contractors), vehicle ownership and costs, route density, insurance (including any cargo or specialized coverage) and service-level performance.
Local courier businesses are route businesses with a few big customers. The contracts and the drivers decide whether the revenue lasts.
Revenue checks
| Item | Source |
|---|---|
| Revenue by customer, monthly | Invoices, receivables |
| Scheduled routes vs on-demand | Dispatch system |
| Stops per route, miles, time | Dispatch / GPS |
| Contract terms and notice | Agreements |
| Service metrics (on-time, claims) | Customer scorecards |
How a courier makes money, and where it leaks
Courier revenue comes in two shapes. Scheduled routes (a lab pickup loop twice a day, a pharmacy delivery run every afternoon) are priced per run or per stop and repeat until the customer changes vendor. On-demand jobs are priced per delivery, by distance and urgency, and vary with the customer's own business. Costs are drivers and vehicles. Profit depends on how many stops each driver makes per hour and how much of the driving is paid.
Illustrative example, not a real courier or market rate
A lab route pays $95 a run and runs twice a day, 22 days a month: 2 × 22 × $95 = $4,180 a month. Each run takes 2.5 hours and 60 miles. If the driver is a contractor paid 60% of the run price, the driver gets $57 a run and the company keeps $38, or $1,672 a month before dispatch, insurance and overhead. If the driver is an employee at $20 an hour plus 12% for payroll costs, and the company's van costs $0.50 a mile to run, each run costs 2.5 × $20 × 1.12 + 60 × $0.50 = $56 + $30 = $86, and the company keeps $9 a run. Same route, very different profit depending on how drivers are engaged. Which is why classification is the first labor question in this industry, not the last.
Driver, vehicle and insurance checks
- Driver roster, pay method, classification, tenure; background checks.
- Who owns the vehicles: company fleet or drivers' cars?
- Insurance: auto, cargo, any customer-required coverage; claims.
- Procedures for medical or confidential deliveries.
- Owner's role in dispatch and customer relationships.
Concentration is the biggest issue; see customer concentration.
Medical and confidential deliveries
Lab specimens, pharmacy orders and legal documents are good business because the customers need reliability and are sticky. They also bring rules. Diagnostic specimens are often shipped as Category B infectious substances, which have federal packaging and handling requirements (49 CFR 173.199). Drivers who may be exposed to blood or other infectious materials fall under OSHA's bloodborne pathogens standard. Couriers handling patient information for healthcare customers usually sign business associate agreements under HIPAA. Ask for the training records, the agreements and any incident reports. A customer that requires chain-of-custody logs will check them; a missing log can end a contract.
Vehicles and federal rules
Most local couriers use cars, vans or small box trucks, but federal motor carrier safety rules can apply to some interstate operations and larger vehicles; 49 CFR Part 390 sets out who's covered. Ask what each vehicle weighs, whether any cross state lines, and whether the company holds a USDOT number. If drivers use their own cars, check that the company's insurance covers hired and non-owned autos and how drivers' personal policies treat commercial use.
What an SBA lender will check
Lenders will match tax returns to IRS transcripts and look closely at concentration and contract terms, since many couriers rely on one or two customers. They'll ask how drivers are classified, because back payroll taxes can be large, and whether the seller holds the key customer relationships. A contract that can end on 30 days' notice will be treated cautiously.
Worked example: the route that pays for the others
Illustrative example, not a real courier
A courier runs 9 scheduled routes. Route profitability, using actual driver pay, vehicle costs and fuel: the two lab routes each contribute $3,000 a month, the four pharmacy routes $1,100 each, and three parts-distribution routes $250 each. Total: $6,000 + $4,400 + $750 = $11,150 a month, before dispatch, insurance overhead and the owner. The two lab routes, both for one lab company, are 54% of route contribution ($6,000 ÷ $11,150). If the lab rebids its courier contract, which labs do from time to time, more than half the profit is at stake. Ask when each contract was last bid, what the competing bids looked like, and how the courier's on-time and specimen-handling record compares with the lab's requirements.
Red flags specific to courier businesses
- One customer over a large share of revenue with a short notice period.
- Drivers paid as contractors but scheduled and directed like employees.
- Vehicles owned by drivers with no clear insurance for business use.
- Missed delivery or chain-of-custody incidents with medical customers.
- Rates unchanged for years while fuel and wages rose.
- An owner who dispatches every job and holds every customer relationship.
What moves the value of a courier business
We don't value deals or publish multiples we can't verify. These are the factors appraisers and lenders weigh:
| Factor | Supports a higher value | Pulls it lower |
|---|---|---|
| Revenue type | Scheduled routes under contract | Mostly on-demand jobs |
| Customers | Many shippers, long relationships | One lab or pharmacy chain dominates |
| Drivers | Stable, properly classified | Contractors treated like employees, high turnover |
| Vehicles | Company fleet in good condition, or clear driver-vehicle terms | Unclear ownership and insurance |
| Compliance | Training, agreements and logs for medical work | Missing chain-of-custody records |
Documents to request
- Revenue by customer and route, monthly, for 24 months; invoices and receivables aging.
- Customer contracts, rate sheets and notice periods.
- Dispatch and GPS data: stops, miles and time by route.
- Driver roster, pay records, agreements and background checks.
- Vehicle list, titles, maintenance records; insurance policies and claims.
- Training records, business associate agreements, chain-of-custody logs and incident reports for medical work.
- Tax returns, P&Ls, bank statements.
The first 90 days after you buy
Keep every route running with the same drivers and times. Courier customers notice a missed pickup immediately. Meet the dispatch contacts at the top customers in the first weeks, confirm insurance certificates they require, and check that drivers are paid correctly and on time under your entity. Then review route profitability with real driver and vehicle costs, and decide which routes to reprice or restructure.
Questions to ask the seller
- What share of revenue comes from your top three customers, and how long has each been with you?
- What notice period does each contract have, and has any customer rebid the work recently?
- How are drivers paid, and has anyone ever challenged their classification?
- Who owns the vehicles, and what insurance covers them?
- What are your on-time and claims numbers for the main customers?
- Have you had any lost specimens, data incidents or chain-of-custody failures?
Employee drivers or contractors?
Many courier businesses use independent contractor drivers. That keeps costs flexible, but the classification has to hold up under federal and state tests, and some states apply stricter rules than others. Ask how drivers are paid, who sets their routes and hours, who owns the vehicles, and whether drivers work for other companies. Get copies of the contractor agreements and any past audits or claims. Your attorney should review whether the setup is defensible where you operate, because back taxes and wage claims after a reclassification would land on the owner.
Frequently asked questions
What makes a courier business valuable?
Recurring scheduled routes with diversified customers, dense routes, reliable drivers, and contracts that don't depend on the owner's personal relationships.
Are courier drivers contractors?
Many couriers use independent contractors, which carries classification risk if drivers are controlled like employees. Review against IRS guidance and state rules, which vary.
Are medical deliveries regulated?
Specimen and pharmaceutical deliveries can involve handling, privacy and chain-of-custody requirements set by customers and regulations. Check training and procedures.
How concentrated are courier customers?
Often very. One pharmacy chain or lab can be a large share of revenue. Check contract terms and how long the relationship has lasted.
How do I verify a courier company's revenue?
Tie invoices by customer to dispatch records (jobs, stops, miles) and to payments in the bank. For scheduled routes, the contract or rate sheet times the number of runs should roughly equal what was invoiced. On-demand revenue should line up with dispatch volumes by day.
What should I check about a courier's on-demand revenue?
Volume by customer and by day, average price per job, and how many jobs come from one-off customers versus repeat accounts. On-demand work often depends on a dispatcher or owner who answers the phone fast; check who that is and whether they're staying.
Sources
- IRS: Independent contractor or employee?
- eCFR 49 CFR 173.199 (Category B infectious substances: transport)
- OSHA Bloodborne Pathogens standard, 29 CFR 1910.1030
- HIPAA privacy, security and breach rules, 45 CFR Part 164
- eCFR 49 CFR Part 390 (federal motor carrier safety: applicability)
Related guides
General information, not legal, tax, financial or investment advice. Rules and lender practices change; check the linked sources and talk to your attorney, CPA and lender about your deal. Examples with named numbers are illustrations, not real businesses. OKtoBuy's Deal Check does not value businesses or give price opinions.