A Guide to Selling a Residential Roofing Services Company
The standard formula for business valuation is multiplying your gross annual revenue by three. On average, this will be the approximate value of your company.
Many factors can influence this number, though. The industry you operate within and the size of your business play a role.
Determining value is only the first step, though. If you’re looking to sell a residential roofing services company, there are certain details to remember. Let’s explore some of the most notable below.
Develop an Exit Strategy
Don’t make the mistake of selling your business without an exit strategy. This involves easing the transition once ownership changes.
You could have a trusted employee work with the new owner to get them up to speed. Some entrepreneurs choose to work at the company themselves for a year or two after they sell it. This situation is often included in many business sales contracts.
Without an exit strategy, your business could fail once the new owner steps in. This scenario would effectively undo the years of hard work you put into building your company. To stay prepared, start planning your strategy before looking for buyers.
Organize Your Documents
Companies with poorly organized documents are headaches to deal with. This is true for both the seller and the buyer.
In many cases, poor documentation could deter potential buyers. This makes it harder to sell your company. After all, your company’s financial information is a large part of its foundation.
Anticipate buyers scrutinizing every business document you own. Don’t assume that buyers will allow you to clarify or make corrections. They might walk away from the sale if things don’t look appropriate.
Presentation is also important. Your business documentation should be easy to understand and free of complicated jargon. Not only is this more engaging, but it will minimize misunderstandings.
It’s best to organize your documents as soon as possible. It can take a substantial amount of time to undo poor bookkeeping. This is especially true if you’ve neglected your business’s documentation for years.
Showcase Your Company Appropriately
People looking to purchase a business often review dozens of options. So, you’ll have to stand out from the crowd.
Do your best to showcase your company’s potential profitability. For instance, you might have a combined social following of 1 million users.
Due to this, every piece of content you post gets approximately 5 million impressions. Similarly, your roofing company might have hundreds of loyal customers in the local area.
Appraise Your Business
Some entrepreneurs can’t separate their company’s perceived value from its actual value. Someone who spent 20 years building a brand might have an inflated perception of its worth.
Regardless of how much you want for your business, it’s crucial to appraise it properly. This considers many factors, including market share, company size, and competitive advantages. Appraisals also review your business model, management team competency, and growth rate.
You can still ask for more money than what your company is appraised at. It’s up to you to convince the buyer by illuminating major selling points that might not seem obvious at first glance.
Boost Your Sales
Buyers rarely want to purchase a roofing business that isn’t doing well. If they do, they likely want to pay far less than it’s worth. Your recent sales performance plays a significant role in finding buyers.
Do your best to boost your sales numbers sustainably. This conveys potential profitability and makes your company easier to sell.
Prepare to break down your sales model for your buyer. Even though your sales numbers will be stellar, they’ll want to understand how to replicate your strategies. Creating a presentation is a great way to achieve this.
Find a Prequalified Buyer
There’s nothing worse than finding a buyer who can’t secure financing. These situations can sometimes waste weeks or months of your time.
Finding someone prequalified can ensure they have access to the necessary capital. They should also be familiar with running a business in your industry.
Inexperienced buyers are liable to back out toward the end of the transaction once the situation becomes too “real” for them. It’s in your best interest to look for buyers who want to move forward quickly.
There’s nothing inherently wrong with taking your time during the transaction. If they want to drag things out for more than a year, look elsewhere.
Be Patient
Having patience goes a long way toward getting the best result. Don’t choose the first buyer you encounter, and don’t rush the process.
It often takes months to sell a business, and it could take even longer to sell it for the right amount. Stay levelheaded and keep searching for the right business buyers. Eventually, you’ll find one who meets your needs.
Work with a Professional
Working with a professional is one of the most efficient ways to sell your roofing business. They have the tools and resources to help you find qualified buyers. They can also help you avoid pitfalls you may have otherwise encountered.
When searching for someone to work with, look at their past reputation. See what previous clients have to say about their experiences.
Keep an eye out for reviews that mention timeliness, professionalism, and level of communication. Ask about their pricing structure, as well.
Shopping around will help you find the best deal. You get what you pay for, though. Don’t feel tempted to go with the cheapest option.
This will likely give you poor results. Finally, trust your intuition. If something feels off, don’t hesitate to continue your search elsewhere.
Don’t Settle When Selling Residential Roofing Services Business
It can be tempting to settle for less than your company is worth if the process takes longer than expected. The above information will help you get the most out of your residential roofing services company.
You can then invest this money into a new business venture or focus on other areas of your life. Regardless, your future will be bright.
Speak with a representative at Fusion today. Our professional team is ready to connect you with the ideal buyer.
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The Types of Business Exit Strategies: Which One Is Right for You?
Almost half of all business owners don’t have an exit strategy. Though it might sound surprising, it’s easy to see how this happens.
When we start and build a business, it’s a commitment that’s often unmatched in other areas of our work life. So, we don’t give much thought to what will happen when we are no longer a small business owner.
But having an exit strategy is vital to ensuring your legacy lives on, and you get the financial rewards you deserve.
In this article, we’ll explain the main types of business exit strategies to help you determine the best one.
Business Exit Strategies: Why Your Choice Is Important
Even if quitting your business isn’t imminent, an exit strategy is a crucial roadmap. It helps you set your sights on the future and ensure your business thrives long after you leave.
That includes protecting assets, employees’ jobs, and your brand’s reputation. It will also ensure you get the best return from all the time and money invested in your business.
So whether you intend to retire, make money, or want a change of scenery, an exit plan is a must.
Liquidation
Liquidation is a last resort for a business that can’t continue operating for financial reasons. This exit strategy is often involuntary and happens when you have a struggling business.
When you liquidate a business, you turn any remaining assets into cash and use that money to pay creditors. Those assets may be physical items, or they could be things like your website or intellectual property.
It’s an exit strategy that rarely yields a healthy financial return for your business because your priority is paying debts. That’s why it’s only considered a choice when other options aren’t available.
Selling to Another Business In Your Industry
This exit strategy is also known as selling to strategic buyers or a business acquisition. Companies combine forces, with the purchasing company taking charge of both.
It could be a company in your industry – in other words, a competitor. Or one that can see synergies between your business and theirs.
This sale can often happen at a premium price because the company gains benefits beyond what your business offers in a standalone deal.
A competitor, for example, will acquire your clients and a larger market share. However, this is also a tricky exit strategy to execute.
It requires lots of planning, and you’ll need to work hard to align both businesses to create a smooth-running operation. It also means parts of your business, like your brand name, may disappear forever.
A Merger
A strategic buyer will buy our your company. In contrast, a merger is one where both companies join to form one new single entity. This is a popular form of exit strategy.
It allows business owners to leave their management and leadership responsibilities. However, they may continue to play a non-operational role on the new board.
So, it gives owners the chance to help their company thrive after they exit. It’s a chance to earn higher long-term returns, as you may continue to own shares in the newly merged business.
Management Buy-Out
A management buy-out is when part or all of your management team buys the business from the owner.
It’s a unique succession plan for a business, putting your company in the hands of people who already know how to run it. That means business continuity is often excellent.
That’s a central factor in the future success of a business when an owner sells it. The process also empowers a committed team to push the company forward and help it to grow.
Moreover, it often safeguards employees’ jobs, as new owners often run things without significant changes.
Family Succession
Perhaps one of the most traditional exit strategies for a business owner is passing the company on to a relative, often an adult offspring.
It is often a popular option because it’s a way for future generations to benefit from the business and a chance to maintain the business name and reputation. It can be straightforward or complex, often depending on family dynamics.
You need someone with a suitable skill set and a firm commitment to running the business. You also need to decide what input you want after you pass the company to someone in your family.
It’s helpful to set terms in a legally binding framework to avoid disputes or issues later.
Venture Capital Firms
You can sell to venture capital firms or private equity firms. Most often, these firms buy a share in a company rather than an outright purchase.
It’s useful for companies needing cash injection to grow in a competitive but promising market space. Private equity firms are more likely to invest in mature companies.
The advantage of these investors is that they embrace high-risk ventures, but that often comes at a price because they want a generous share to reflect that risk.
However, they also play a central role in helping that company grow, using industry expertise to allow it to thrive.
Selling a Business to a Private Buyer
You’ll typically use a broker to sell a company to a private buyer. Doing that helps you access many potential buyers instead of trying to find one directly.
These are people outside of traditional finance circles and may be new to your industry, too.
It could be an entrepreneur wanting an established company with the potential to grow or someone outside the industry who wants to expand.
This sale will need careful negotiation to help you get the right price.
However, it’s an opportunity to get offers from more than one buyer and the chance to select one that best fits your business priorities.
For example, that could mean the price they pay or a commitment to retaining employees or the brand.
Getting Rewarded for Your Business
You’ve put effort and passion into your business and taken many risks to help it grow. So, ensure you understand the types of business exit strategies available, as it will help you gain the financial rewards you deserve.
Head here to explore Fusion’s services for more information on selling a St. Louis business via a broker.
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The Different Buyers You Might Encounter
If you’re selling a business for the first time, you might have a preconceived notion of the type of buyer that’s most likely to purchase your business. However, the truth is that sellers often get competitive and attractive offers from buyers that they were not expecting to have an interest in their business. Let’s take a look at some of the variety of buyers you might encounter on the path to selling your business.
Your Family Members
One common buyer would be a member or members of your family. One of the advantages to selling to family members is they already may have a deep understanding of what it means to own and operate your business. As a result, they may feel more prepared.
On the other hand, just because someone is your family member does not mean they have the chops to actually run your business. Further, if you sell to a family member, you may end up dealing with someone who has less cash available to buy.
Competitors and Synergistic Buyers
You may not have warm fuzzy feelings towards your competitors, but the truth is that you need to be open to the idea of receiving offers from them. In fact, many competitors immediately look to their competition first when they decide they are going to expand their business. Your competitors make a lot of sense as good candidates because they understand your industry. Purchasing your business represents a viable way to rapidly expand their own offering with products and/or geographical reach.
Along similar lines, synergistic buyers acquire new companies in order to leverage their existing operations. You will find these buyers are typically larger entities in the same or related industries. In buying your business, their goal is to support and quickly add value to their current organization.
Individual Owner Operators
Many sellers end up with a deal on the table from an individual buyer. There are definite advantages associated with this type of buyer including the fact that it can streamline the sales process when you are dealing with one person rather than a group. Individual buyers oftentimes have corporate experience that helps them to effectively take over and manage a business. Another advantage to the individual buyer is that he or she oftentimes has a personal interest in the business and plans to successfully operate and improve it.
Financial Buyers
A financial buyer is most interested in their ROI. They will zero in on finding out about the cash flow and long-term exit strategies. These investors are typically only interested in very solid companies that are generating solid revenue. They will be less likely to want to take the time to make changes and improvements, so they will expect healthy returns on their investment on day one.
Your business broker or M&A advisor will help you understand the pros and cons of various buyers when it comes to your unique situation. Ultimately, you’ll find the type of buyer that is best suited to buy your business and that fulfills your needs and goals simultaneously.
Copyright: Business Brokerage Press, Inc.
The post The Different Buyers You Might Encounter appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
The Complexities of Business Valuations
Many buyers and sellers are not aware of the complexities that go into appraisals for businesses. To get the most accurate results, a business needs to be looked at from a variety of angles. When completing a business valuation, we look at everything from comparable businesses to EBITDA. There are a lot of nuances involved that are customized depending on the business at hand. Without looking at a wide range of factors, you could accidentally get less for your business than what it’s really worth.
What Will Be Important for Your Buyer?
When you’re selling a business, part of the fair market value of your business relates to benefits that your buyer will receive. Obviously, your valuation will include factors such as market share and profitability that a buyer will enjoy. But there are also less obvious factors. For example, is there potential for the business to expand beyond its current niche? What is the competition like? What about access to customers?
Current Trends
Also brought into consideration should be trends that will impact the business. These trends could be everything from trends in technology to economic or social changes. In some cases, business trends might make a business much more valuable. For example, due to the recent pandemic and fast adaptation of online conferences, companies that integrated video conferencing had a major edge over those that did not.
When business owners are aware of emerging market trends, it allows them to develop new offerings to meet current demand. In turn, this can boost business growth and increase a business valuation.
The Workforce
Recent workforce issues have definitely impacted the value of businesses across the board. If you have a strong, highly trained and dependable workforce, it will help to increase the value of your business. If your staff members are customer-facing, positive customer experiences will drive revenue growth. Further, buyers will feel more confident buying a business with a reliable roster of employees.
There are many questions that will affect your buyer and those should be considered in the price you ultimately decide upon. The savviest business owners are always thinking about trends in society and how to work with them to strengthen the value of their business. They will also consider the decisions made by their competitors and how they impacted their businesses for better or worse.
Copyright: Business Brokerage Press, Inc.
The post The Complexities of Business Valuations appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
How to Sell a Full-Service Catering Company
The accommodation and food industry in St. Louis brings in well over 1.6 million in a year. Have you put in the hard work to grow a successful catering company? If so, you deserve every penny it’s worth.
Still, you may find it difficult to connect with the perfect buyer. You shouldn’t settle for anything less than what you’ve worked for.
Are you wondering what strategies can help sell your company? Keep reading for valuable insights on successfully selling your full-service catering business.
Understanding the Current Catering Industry
Even if you’ve been in the catering business for some time, it’s worth emphasizing that aspects continue to change. Before you try to sell your catering business, you must have a solid grasp of the catering industry’s current dynamics.
Most catering companies provide services for many different event types. This can include everything from weddings and business gatherings to private parties. Understanding the market demand and competitive landscape in St. Louis and the Metro East is crucial.
Staying in the know will help you position your business effectively. That way, you can appeal to a broader pool of potential buyers.
Valuing Your Catering Business
One of the critical steps in selling your catering company is determining its value. Business valuations are complex and involve assessing diverse factors. Several main elements can impact your business’s overall value.
Start by evaluating your company’s financial health. Review your revenue, expenses, and profitability over the past few years. Buyers will want to see a consistent track record of financial stability.
Be prepared to explain the circumstances surrounding any nosedives.
Take into account your long-term contracts or recurring clients. This can add significant value to your business by providing a predictable income stream for the new owner.
Estimate the value of your equipment, kitchen facilities, and other assets. Well-maintained equipment can be a solid selling point for potential buyers.
A strong brand and positive reputation in the catering industry can increase the attractiveness of your business. Consider how others view your brand. Gather evidence to back it up, such as feature articles, catering awards, and more.
As you look for a buyer, remain in the loop about current market trends and the demand for catering services. Buyers may be more interested in businesses that align with current trends, such as eco-friendly catering or niche markets.
Understand your competition and how your business makes itself unique. Be sure to highlight your special selling points to potential buyers.
A diverse and loyal customer base can be an asset. Be prepared to provide information about your client’s demographics. Don’t forget to outline the types of events you often cater to.
Prepare Your Business Financials
Do you want to attract serious buyers? If so, you need to have your financial house in order. You can do several vital things to prepare your business financials for the sale.
First of all, you should prepare accurate and up-to-date financial statements. This must include income statements, balance sheets, and cash flow statements. Instead of being optional, this documentation is essential for potential buyers and their financial advisors.
Double-check that your tax records are organized and up-to-date. Buyers will want to review your tax history to assess potential liabilities.
Hand over a detailed analysis of your business’s profitability. This should include profit margins, revenue growth, and cost management strategies.
Spend time breaking down your expenses, such as overhead, labor, and food costs. This transparency helps buyers understand the financial aspects of running your catering company.
Remember to organize your accounts receivable and payable. Buyers will want to know about outstanding invoices and liabilities.
Gather all legal documents related to your business, from contracts and permits to licenses and more. Ensure that your business is compliant with local regulations.
Marketing and Selling Your Company
Once you’ve assessed the value of your business and prepared your financials, it’s time to market it for sale. Several strategies are proven ways to attract potential buyers.
Consider hiring a professional business broker with experience in the food service industry. They can help you hone in on potential buyers and facilitate a smooth sale.
Develop a detailed information packet highlighting your catering company’s strengths. This can include financial data, client testimonials, and growth potential.
Post your catering business on online marketplaces and business-for-sale websites. Include high-quality photos and a compelling description of your services.
Are you feeling overwhelmed? Be sure to leverage your industry contacts and network within the catering community. Attend industry events and join associations to connect with potential buyers.
When sharing sensitive information with potential buyers, have them sign confidentiality agreements. Doing this will protect your business’s proprietary data.
Sell a Business by Negotiating
As you begin negotiations with potential buyers, keep some tips in mind.
First off, buyers may have their own terms and conditions. Be flexible and open to negotiation while still protecting your interests.
You can count on buyers to do their research and double-check the information you’ve provided. That’s why you should always be transparent and provide access to relevant documents.
Consider hiring legal counsel experienced in business sales to help draft and review the contract.
By now, you should have developed a transition plan to help the new owner take over the business. This may include training, introductions to key clients, and ongoing support.
Once the terms are agreed upon, work with your legal and financial advisors. They can help finalize the sale and transfer ownership.
It’s Time to Sell Your Full-Service Catering Company
With these proven strategies, you can sell your full-service catering company for a fair price. That way, you can start the next chapter of your life, whether that’s a new business or relaxing in retirement.
Fusion is here to help. We’re a discrete and full-service broker that’s well-respected in the St. Louis area and beyond. From valuation to closing the deal, our experienced brokerage team can help you every step of the way.
Do you have questions about our process? Feel free to touch base with a Fusion team member to get the ball rolling.
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