Selling a business is a process that is mostly controlled by the business owner, but there’s one important step that isn’t.
Deciding to sell your long-loved business starts a series of following decisions. If executed well, they will leave you with a large sum of money and give you the freedom to pursue retirement or other interests. Along the way, you will likely hire an HVAC specific business broker, set a sales asking price, and meet potential buyers. The good news is that you control the pace and quality of all of these decisions.
But when it comes to getting a bona fide offer, the timing is unknown.
When I meet with heating and air business owners, it’s a question that comes up all the time. How long is it going to take to sell my business? It’s a fair question, and if roles were reversed, I would be asking too. The answer is…anything I would tell you would be a guess. To try and estimate a time frame wouldn’t be fair to anyone, because I simply don’t know. What makes answering this question so tough? It’s the dozens of factors in play including business size, location, owner involvement, accounting accuracy, lease agreements, service contracts, debt ratios, number of employees, acts of God, and a dozen other variables.
Instead, I try to encourage sellers to focus on the things that can control to remove friction and influence a speedy sale.
Getting the business SBA pre-approved
Even before you have an interested buyer, your broker can get your business approved to lend. This means that provided you have a credit-worthy buyer, the bank will have already seen your financials and made the decision that yours is a good business and they would be willing to fund a buyer for it.
Getting your books clean
Buyers will perform their due diligence and inspect your accounting practices. Before that happens, work with your CPA and make sure non-business-related expenses and tax-saving strategies are in line with what a buyer is looking for. Be sure to loop in your business broker so that they can offer perspective with industry best practices.
Focus on maintenance agreements
Heating and air businesses that have a significant portion of recurring revenue through maintenance agreements sell much faster than businesses that rely on new construction. Buyers pay a premium for businesses with predictable income and aren’t just riding a housing boom in a particular area.
Get out of the truck
Buyers want a business, not a job. Do the best you can to spend your days running the business, not turning wrenches. As a general rule, the less involved you are with day to day operations, the more your company is worth, and the faster it will sell.
Just like preparing a home for a sale, you should prepare your business up to 3 years before you want to exit. Focus on profitability, managing reasonable debt, and setting up systems and procedures to ensure you will fast forward your exit with the highest possible offer.
Be leary of brokers that make fantastic claims or don’t challenge you on your assumptions. Telling you what you want to hear, and pricing a business incorrectly often leads to frustration and broken relationships down the line.
When it comes to getting an offer, no broker can accurately tell you when, but if you work with the right one, they can make the path to find you as smooth as possible and clear of any deal-killing surprises.
About Patrick Lange:
Patrick Lange is an experienced HVAC specific business broker with Business Modification Group based in Horseshoe Beach, Florida. He has a unique background in financial planning and has even owned an HVAC business himself. This makes him well suited to working with some of the most successful HVAC business owners in the country. Specializing in companies with 1-10 million dollars in revenue, he maintains a network of buyers and sellers in the industry. He has sold more HVAC businesses than any other broker in the United States over the last 12 months and is currently the Vice President of the Business Brokers of Florida (North Florida District.)