Selling your business is a big decision, but finding the right partner or buyer is an even bigger one. After all, you want to make sure you get the best deal possible. At Leap Partners, we work with a lot of different HVAC and Plumbing owners and have purchased 37 businesses over the past 14 years. We pride ourselves on quick, transparent, fair, and customized deals. Your business is unique, so your deal should be too. Here are a few pointers we like to give anyone starting the process of selling.
Step 1: Determine Your Goals
What are the goals you hope to accomplish when you sell your business? Are you looking for a quick sale so that you can retire and enjoy life without having to worry about work? Or are you more concerned with making sure that whoever buys your business carries on its legacy and continues its success long after you have left? Knowing exactly what kind of outcome you would like is essential in determining if now is the right time for you to sell your business. Your answers to these questions is also key in deciding who to sell your business to. If your goal is to find a buyer who will take care of your employees and will invest in carrying on your company’s legacy, you might find the company who offers the highest price may not share your same goals. It is better to know that up front.
Step 2: Find the Right Buyer
Once you outline your goals with selling, the next step is to find the right buyer. What makes a strong buyer? When considering selling, it is important to evaluate the buyer on a few criteria.
1) Can the buyer financially and operationally support the business? It can sometimes be difficult to find a financially qualified buyer who also has experience growing and operating a business like yours. In fact, we advise finding a buyer who has experience operating many different types and sizes of HVAC businesses. This ensures your company’s legacy and your employees will be in good hands.
2) Does the buyer have experience with buying HVAC businesses? Selling your business can be quick and efficient or it can be long, painful, and stressful. There are a lot of moving pieces and steps in the selling process. Working with a buyer who has a lot of experience and has worked out an efficient buying process, will make your job as a seller much less stressful. Also, don’t just take the buyer’s word when you ask about their experience buying companies. Ask the buyer for a list of references you can check. Calling and talking to past owners who have sold to your prospective buyer is the best test to find the right buyer. Also, make sure your prospective buyer didn’t hand pick the references they shared with you. Insist on talking to any and all previous owners, so you can make sure to get the full story.
3) Does the buyer’s goals match your goals? Is the buyer interested in buying your business so they can flip it and squeeze more efficiency out of it? If so, your employees should be prepared for job loss or at least an organizational restructuring. Or, is your buyer planning to buy your business, maintain its structure, and just invest in software and operational growth to continue building on your legacy and foundation? Again, when evaluating a buyer’s goals, don’t only take their word for it. With every step in your evaluation process, call and talk to the buyer’s list of previous sellers and owners.
4) Can you trust the buyer? This is arguably the most important criteria. You have poured your blood, sweat, and tears into your business. You have sacrificed and hustled to serve your community, employees, and customers. Your business is a part of you. So, it is important to make sure you can trust your buyer will do what they say they will and they will look out for your best interests. No amount of stipulations in a contract will protect you, your family, and your employees from stress and frustration if you can’t trust the person or team who is buying your business. There are unfortunately some buyers who are looking for a good deal, at all costs. They will say whatever it takes to get a deal across the finish line, but then will not follow through, or won’t be transparent with the seller through negotiations. The best way to figure out if you can trust a prospective buyer is to meet with them, make sure they can appropriately answer any and all questions you have, and make sure to extensively talk to the list of former owners who sold to them.
Step 3: Prepare to Sell
The last step in the process of selling, after your have outlined your goals and have found the right buyer, is signing an letter of intent (LOI) and moving into the due diligence phase. The easiest way to ensure your due diligence process is stress free is to prepare. Notify your Accountant and Legal Counsel. Collect and organize your financial records. Also, proactively set aside time each week to devote to helping move the due diligence along. Due diligences move quickly only if the buyer’s team and the seller’s team work together and prioritize moving quickly.
Selling your business is a big decision but it doesn’t have to be scary. You are not alone — thousands of businesses are bought and sold each year. If you follow these steps, you will have a great experience and will achieve all of your goals.