The restoration industry news is full of stories about mergers and acquisitions. Are you considering selling your business? If you are, you should take a look at the following questions and make sure you and your
company are in a strong position to sell.
Who am I without my company and my job?
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Most entrepreneurs do not have an identity without their business because that is what they have done for much of their working life; pouring their blood, sweat, and tears into it. For many, the thought of selling and being able to step out of their business is a liberating thought, yet the reality of this decision is life changing as well.
In assessing this process, you need to think about the impact on your life and lifestyle. If you have done a great job building your business, then it should be easy to own and manage. Before you decide to sell your business, you need to think about your life without the business, families, purpose, and satisfaction that is derived from it. Once you know how you will spend your time and what the next chapter of your life looks like (and this makes your happy), you are ready to think about what makes your business valuable to a potential buyer.
Will your business function without your direct involvement?
No one wants to buy a low-paying job. People will be willing to pay a premium for a profitable business that operates without the direct involvement of the owner. Look at your time and make sure you are working on your business and not in your business. This means you are not essential to getting estimates out the door and projects complete.
You need to assemble a great team and empower them to run the activities of the daily business. Your job should
become one of a great coach, conductor, and leader. When the company operates without your daily involvement, this is strong benefit to the future owners. A good test for your company is whether you can go away for a two-week vacation without causing a real challenge for the business.
What is your business’s curb appeal?
Sellers of a house know curb appeal is one of the key drivers of value and interest in a property. You need to take the same approach when you consider selling your business. Curb appeal is quite literally the physical appearance of your office workspace, assets, staff, website, paperwork, and outward
representations of your business. Take an outsider’s view of your company and think about the appearance. A sloppy or unprofessional appearance often hints of operational issues.
What truth lies within your financial statements?
When determining the value of your business, the financial statements will reveal the truth. Make sure your financial house is in order, properly structured and very clear.
All statements need to align and paint a clear picture of operational excellence.
Be able to verify your numbers, tie your statements together (balance sheet and income statements), and show stability
in revenue, profits, and cash. It is not enough to have your CPA or CAA run a monthly statement. You need to prepare monthly statements and be able to explain and defend the information that is presented. These numbers will be used by the buyers to determine value and will be critically and deeply analyzed during the due diligence process. Having clean and quality numbers is essential to getting a strong price and assuring you have a successful transaction.
Do you have a balance client base?
A strong business will not be dependent on a single client for over 20% of overall revenue. If you lose any client, it may hurt, but will not be detrimental to your business.
You need to be able to report your top clients, all revenue sources and be able to show the source of your leads and sales. Buyers want to be able to predict future sales and profitability – having balance in work sources make these predictions more accurate and easier to forecast.
Having strong answers to these questions will improve your ability to sell your business and get the highest price possible.
Phillip Rosebrook Jr., CR, is the president and managing partner in Business Mentors, and founding partner of RestorationTrainingOnline.com. He specializes in organizational change, building corporate infrastructure, defining marketing strategy, developing measurements for accountability and creating sustainable business plans. He is a frequent author for C&R, having earned the Golden Quill Award for an article on direction and vision. Phil is a RIA Certified Restorer (#179) and has held numerous IICRC Certifications. He has been active in the restoration industry for over 30 years and served as an industry advisor and consultant for over 20 years.
