Many brokers believe the market for acquisitions will heat up in 2025. That’s good news if you’ve been thinking of selling or retiring. But before you list, here’s a reminder that you are in charge of the deal. You don’t have to say yes to any buyer, terms, or timing that doesn’t fit your plans or your business.
Here are some of the things you don’t have to say yes to.
Negotiating with the first guy who calls you. If you’ve got a sellable business, you’re probably fielding calls and emails from lots of potential buyers. Some are just tire kickers; they’re not serious about investing – they’re just curious. Don’t let them waste your time. Some are fresh out of get-rich-quick seminars, full of information but short on wisdom. No, a smart owner will not sell you his business and self-finance 100%. No, you can’t expect an owner to turn over his company, his license, and his reputation to someone with no industry experience who knows everything he knows from a book.
On the other side of the coin are the professional buyers, PE firms who reach out directly to make an offer. It might even be a good offer, at least on the surface. But you should never say yes until you have more information. By that, I mean more offers.
You’ll only be sure that you’ve gotten the best price and the best terms if you have something to compare the deal to. Recently, I set up three calls on the same day for a seller. After we finished the calls, the seller said, “You know, I thought I really liked the first prospect. Until I talked to number two.” That’s the power of having a choice.
Professional buyers know that when a seller engages a broker or decides to list his company on the open market, it will cost them more money. So, they do their best to get the seller into a one-on-one conversation. That usually costs the seller money. I don’t blame them; I’m just telling you that you don’t have to say yes.
Agreeing to terms that put your retirement or your legacy at risk. For most owners, their business is their biggest asset, and its sale is the most significant transaction of their lives. You only have one shot at making a deal that is in your best interest, so you shouldn’t agree to terms that make you take on more risk than is needed.
The blessing – and the curse – of an HVAC business is that you can build a company worth millions with a few techs, some tools, and some used vans. The downside of the business is that if the new owner fails, all you can recoup is the tools and a few used vans. So you want to make sure you don’t put more skin in the game than the new owner has earned.
You should never self-finance more money than you are willing to lose. You should never sell to someone who will treat your employees poorly or seems untrustworthy. It’s one thing to have the new owner try his best and fail; it’s another to sell to someone who cuts corners or doesn’t deal honestly. Trust your gut.
And just because a professional buyer tells you that (expensive or one-sided) terms are “usual” and “the market norm” doesn’t mean you have to agree to them. If you have more than one buyer who’s interested, you have choices. If your company is valuable, you will eventually find the right buyer and the right terms. I always say that the best deals are those where everybody walks away feeling good. Don’t settle.
Finally – Don’t deal with jerks. That one doesn’t need any elaboration.
If you are curious what your company is worth, click here for a confidential an complimentary opinion of value.
