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What To Consider Before Selling Your Small Business
Building Service Contractors Must First Get Their House In Order
Are You Emotionally Ready To Sell Your Business?
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BY Stephanie S. Beecher
网曝门 Services-Private Educational Facilities Cleaning In Bath, NY 14810. Go to for free articles.
The reasons for wanting to sell a janitorial business run the gamut. Whether building service contractors are seeking an exit due to retirement, family matters or to take advantage of new opportunities, the first step to finding a buyer is understanding that the process is far more complicated than putting up a 鈥淔or Sale鈥� sign.
It sounds rudimentary, but mergers and acquisitions experts say BSCs often think they are ready to sell their companies, when in reality few have all of their affairs in order.
Consider a call taken by one of the M&A experts: A potential client wanted to sell his regional janitorial company. Yet, when pressed about some basic financial fundamentals of the business, the seller revealed the company was not only in debt, but also owed money to the IRS.
It鈥檚 an extreme case of ill preparation to be sure, but experts say it rivals an all too common misconception among building service contractors looking to plant their feet in the acquisition market.
鈥淚 would say about 10 percent of companies we encounter are prepared for a strategic sale,鈥� says Mark Herbick, president at Pursant, Bannockburn, Illinois. 鈥淭hey think [the business] is fine. They think the business is great. But, it鈥檚 very rare that BSCs have gone on to optimize their businesses.鈥�
It Takes Time
Prior to the recession, acquiring facility service companies was a hot market. Buyers willingly paid for companies based on future expectations and generally saw a return on investment. But when the economy collapsed, tenants moved out and the janitorial industry subsequently suffered. As a result, buyers 鈥渇elt burned and pulled in all their tentacles,鈥� says Lyle Graddon, president at Graddon Equity Advisors, Seattle. These days, BSCs who are looking to sell can expect a lot more scrutiny.
鈥淥ver the past few years, [sales] have been gradually increasing,鈥� he says. 鈥淲e鈥檙e at a relatively strong time, as far as buying. But the buyers are much more cautious. They want to have confidence in their investment.鈥�
Herbick says BSCs often 鈥渨ake up and just want out鈥� of their businesses, and try to opt for a quick sale. Unfortunately, that鈥檚 not how the market works. M&A experts say BSCs should take anywhere from one to three years to actively enhance the value of their businesses before feeling out buyer interest. In the long run, both the seller and the buyer benefit.
鈥淎 lot of business owners just don鈥檛 know how to do it,鈥� says Herbick. 鈥淚f you were to sell your house, you wouldn鈥檛 just wake up and say, 鈥楬oney, I want to sell the house.鈥� It鈥檚 a major undertaking. There鈥檚 a lot of value in maximizing your enterprise value and in terms of just having a business.鈥�
Graddon agrees.
鈥淲hen you鈥檙e selling your house you do things to it 鈥� you paint, do the landscaping, clean the windows 鈥� everything is neat and staged properly,鈥� says Graddon. 鈥淲hat we鈥檙e recommending is that your company should always be like that. If you get it all ready, so it鈥檚 beautiful and presentable, you鈥檒l be ready when an opportunity comes up. Then you鈥檙e able to exit.鈥�
POSTED ON: 12/6/2016
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