If you’re thinking of selling your HVAC business, there are lots of moving parts to manage at the same time. Before you move forward, consider price, promotion, and process.
Every owner wants to get as much as possible for the business they spent years pouring energy into, but be careful not to price it too high. Many times owners will have a false idea of what their business is worth. Even if you work with a broker, they may not know what price the business should command if they don’t have industry experience. If you do price your business too high, it will struggle to get the attention of buyers. Over time, you’ll get frustrated and lower the price. When that happens, new buyers will notice how long the business has been on the market and will see the new discounted price. They will assume something is wrong with the business, and won’t give it a second look. When it still doesn’t sell, you’ll be forced to lower the price again and continue the downward spiral.
Conversely, pricing a business too low can be problematic too. Sometimes owners will get approached by buyers randomly. My advice is to always test the open market and be confident you know what the business is worth. You and your family are owed fair compensation. An HVAC specific broker can look at what other comparable businesses have sold for in the industry. Together you can come up with a justifiable sales price.
Doing business in this way helps protect your interests when a buyer does try and negotiate. You can show them the collected facts and other documentation. The best-case scenario is to have multiple interested buyers. When a competitive bid situation arises, it’s possible the seller can earn a sales price above what was asked and get to the closing table faster too.
Pricing the business is just one step. Next, you have to advertise. When you are the owner, that can be tricky to do on your own. You must keep the impending sale confidential from employees, customers, and competitors. If any of these parties find out too soon, the results can be catastrophic and destroy any chance of moving forward. I do recommend using a broker for this very reason. By allowing yourself to take a step back, the broker has the experience not only to advertise the business in the right places but also to list pertinent information without revealing your identity too soon. A broker will require the potential buyer to sign a non-disclosure agreement before you ever have a conversation with them. A good broker should also have vetted the buyer to make sure they have the financial resources to complete the transaction.
This is maybe the most important of all the P’s. Selling a business is a complicated transaction with multiple stakeholders. Getting any one of them wrong, or in the wrong order, can spell disaster for owners. Not only can it kill deals, but it can also unwind years of hard work. This is why we strongly urge sellers to get someone working on their behalf. Brokers only get paid when a deal closes, and it is always justified when they help you sell for a higher price or catch a deal-killing detail in the 11th hour. The fee is money well spent because they will handle details like:
- Assigning and negotiating lease terms with an inflexible landlord
- Knowing a banker that can get your buyer approved quickly
- Scheduling a closing attorney that specializes in small business transactions
- Transferring intellectual property
- Separating business from personal expenses.
- Loan transfers
These are just a few of the hundred or so details that will come up. It’s always best to leave the details to the professionals and concentrate on keeping revenues high while they work through the 30-90 day process.