You might be gearing up to sell your HVAC business for a number of reasons – retirement, change in marital status, poor health—or any of a myriad of other reasons. Whatever your motivation for selling, we’re sure you want a seamless transition in which you walk away with a decent profit from the sale.
In this post, we give you a step-by-step HVAC business selling guide including best practices and tips to ensure a successful outcome.
Step #1 Strategically Increase Your HVAC Business Value
The outlook for the HVAC industry is positive with experts projecting it to reach a $367.5 billion valuation by 2030. This is good news for all who are planning on selling before then.
The first step in positioning your HVAC business for a favorable acquisition is increasing its current valuation. You want to do everything in your power to improve the following areas:
- Assets
- Cash flow
- Client base
- Future profit margins
- Annual Maintenance contracts
This can be done by paying off as many outstanding debts as possible, renegotiating terms for business loans, securing new clients, and getting your receivables paid up. Once you’ve done this, you can move on to the next step – organizing your books in preparation for business valuation.
Step #2 Organize Your Books and Get a Business Valuation
Before having your HVAC business professionally valued, it’s worth noting that you’ll want to get your books organized.
Financial records from taxes to contracts must be carefully arranged for easy presentation and reading.
Business valuation experts will comb through your financials and operations, assessing a range of metrics to come up with a fair valuation for your business.
Business valuation is an excellent way to know exactly how much your business is worth. This way, you’ll be able to fully justify your asking price and walk away knowing that you negotiated from an informed point of view. You won’t leave wondering if you left money on the table.
Step #3 Streamline Your Internal Processes and Operations
No systems, no sales; a strong profit base requires a carefully attuned system for your technicians to follow. Have you been in the business so long that the company can only function so long as you’re there?
If this is the case it’s time to extricate yourself from the day-to-day running of your company. Ideally, you should already have systems in place. But if not it’s time to start building them so you can show buyers that the business can survive without you.
You may want to write process manuals of how things are done, explaining company culture and what’s been the existing modus operandi. You’ll also want to show that you have a reliable team that knows how to get on with work and doesn’t need to be micromanaged.
Lastly, the recurring revenue of annual maintenance can significantly increase the value of your business. Buyers covet revenue streams that are repeatable and recurring – it lowers the risk in the transaction thus buyers can pay a premium. Do whatever possible to add recurring revenue streams and you will be rewarded.
Step #4 Hire a Competent HVAC Business Broker
When you decide to sell your HVAC business there’s a lot that goes into it. From business valuation to buyer selection. Navigating the process can be complex without seasoned HVAC business brokers.
Statistics show that just 30% of all businesses on the market are purchased. Without an expert to guide you with regard to due diligence, drafting sales proposals, marketing materials, and handling paperwork, you’re likely to burn out quite fast and fall into the 70% whose businesses are overlooked and never considered.
By bringing on board a qualified HVAC business broker, you make life easier for yourself. A reputable and trustworthy broker will assist you with vetting offers, negotiating with buyers, signing, and closing.
Step #5 Craft a Compelling Growth Strategy
How do you stand out from a host of other HVAC businesses on the market? By including considerations like growth strategies for buyers.
Not only does this demonstrate faith in your company that it has potential, but it also gives interested acquirers a visual of what they can expect if they buy your business.
The strategy can offer insight into services the new owners may wish to incorporate into their technical offerings, digital marketing platforms they can exploit, and new technologies that are changing the HVAC industry.
Secure the Best Price for Your HVAC Business Today
When you plan to sell your HVAC business, it pays to work with business brokers with the experience, expertise, and access to a far-reaching prospective network. Let us help you value, market, and discretely sell your HVAC business. Contact us for more information.
Looking for more insight on selling a business? Check out these links:
- Mitigating Post-Closing Risks Through The Rep and Warranty Insurance
- How to Navigate a Buyer or Seller’s Initial Meeting
- Are You Financially Ready to Sell?
- Buyer Motivation – How to Confirm?
- Sell NOW – The Crystal Ball is Pretty Clear
Disclaimer: Any information provided in this blog is not intended to replace legal, financial, or taxation advice given by qualified professionals.