I get a lot of calls from business owners who start out with, “I’m sure my company’s not worth much, but I’m thinking about trying to sell it anyway.” The interesting thing is that I’ve heard that from owners of $500,000 businesses and $5 million businesses. It’s part Imposter Syndrome, I think, and part information (and opinion) overload.
Company owners get a lot of advice (including from this blog) on what makes a company sellable. They also attend conferences, read industry articles, and listen to other owners about what buyers are looking for. They’ve got a checklist in their head of what makes a business “perfect,” and if they’re missing items on the checklist, they may think their company is unsellable.
The fact is that almost every company is sellable – when you find the right buyer. Buyers are as varied as owners, and they’re not necessarily looking for the perfect business; they’re looking for the perfect fit for them. Each buyer has some firm ideas on what they want in a new acquisition, but they’re also open to possibilities.
They may be looking for low-hanging fruit—a company that needs an infusion of what the buyer has or knows best: technology, operational expertise, marketing, or strong management. They may be looking for a company to expand their geographic reach or establish a foothold in a new market. They may be able to achieve economies of scale by integrating the new company into their current back office operations.
What buyers are really looking for is potential. They’re willing to take on a certain amount of risk because they think they can use assets more efficiently and grow the company’s revenues. They have a strategy in mind and seek the right opportunity to make it happen.
So don’t worry about the well-meaning (and sometimes conflicting) advice you get from other owners or experts at conferences. Is it easier to sell a larger company than a small one? Sure it is. It’s also easier to sell one that has a great customer management system in place and hundreds of maintenance contracts. It’s easier to sell a company with a strong infrastructure and a talented second in command.
But in selling companies, just like selling a home, there’s a market for fixer-uppers. They may not command the highest price or the biggest multiples, but they’re sellable when you find the right fit.
The best – and only way – to know what your business is worth is to get an opinion of value from an experienced broker. Their advice will be based on what buyers are actually paying and looking for in the current market. They’ll also be able to advise you on what kind of improvements will result in a significant return on investment for your company..
It’s never too early to get a professional valuation of your company from someone who knows the industry and has connections to hundreds of prospects who might be looking for a company just like yours. It only takes one buyer to strike a deal that’s a win/win for both parties.
About the Author: Patrick Lange
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Patrick Lange is an experienced HVAC-specific business broker with Business Modification Group based in Madison, 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 country’s most successful HVAC business owners. He specializes in companies with 1-10 million dollars in revenue and maintains a network of buyers and sellers in the industry. He sells a record number of HVAC businesses every year.
