Run Your Business as if You’re Going to Sell it
Preparing a proper exit strategy can take a lot of time and effort
Six short months ago, my husband and I became homeowners for the first time.
In my mind, there’s nothing more stressful than house hunting, going through the mortgage process, and then moving. And, as stressful as the ordeal was, I can only imagine how much worse it could have been if we were trying to sell a home at the same time.
Needless to say, I don’t plan on repeating the experience for quite some time.
FOR SALE
While I suspect that selling a home can be quite arduous, selling a business must be much more challenging. The entire process can take up to three years if the owner is not prepared, according to Bill Pulte, CEO, Pulte Capital Partners LLC.
Yes, that Bill Pulte of Pulte Homes, one of the largest homebuilders in the U.S.
Pulte Capital, a strategic investment firm specializing in the building products industry — including HVAC — is actively seeking investments.
I recently had the chance to talk with Pulte about Pulte Capital and its current endeavors.
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“One of the things these technicians or business owners lack is the ability to confidentially, quickly, and smoothly transition their businesses from their ownership to a new owner,” he said. “What I’ve tried to do is be the go-to guy for many of these contractors. What I’m doing [with Pulte Capital] is investing on behalf of my family and buying these companies from many contractor business owners, and we’re doing it in a way where we respect the employees and the legacy of the company. It’s really kind of a transition from one family business to another. We really focus on companies that have good family values and good legacies.”
Selling a business is difficult for a number of reasons, Pulte explained. “It’s an extremely emotional process that many people don’t realize until they get into it. And the reason for that is because a business — especially an HVAC contracting business — really becomes like a baby for many people. And people want to make sure that if they give up their baby, their baby is going to be in good hands. So, we treat businesses with care — as if they’re someone’s children. One of our competitive advantages, compared to a strategic acquisition, is we really continue the legacy of the company, making it very easy for these HVAC contractors to sell to us.”
Since Pulte’s firm launched in 2013, it has purchased three HVAC companies — all from people who have started their businesses themselves. It is currently looking at acquiring more than 50 HVAC contracting companies.
Pulte said an HVAC contracting business transaction can take anywhere between 30 and 90 days to complete.
“We would like to think of ourselves as the most efficient in the industry,” he said. “But that is when somebody wants to sell and is prepared. When people need more time, we try and give them friendly advice. One of the things we tell them is to thoroughly understand how much of their revenue is coming from replacement sales and service sales as well as service agreements. The reason we try to focus people on that aspect early on in the process is because by the time people try to go sell, they don’t really want to focus on the financial aspects; they want to focus on what their legacy is going to be and how their employees are going to be treated. So, when we introduce ourselves to somebody who’s a few years away from selling, we try to focus on the financial aspects and how to have everything intact. We’re a really good consultant to these people, and we do it free of charge. I’m getting phone calls from people who I’ve advised on how to build their businesses two to three years ago — they’re just now getting into the mindset that they want to sell. It’s very rewarding.”
When preparing an exit strategy, contractors should ensure employees are properly paid from a regulatory standpoint, the business focuses on recurring revenue, and the business has a great local presence and brand name. Pulte also stressed companies that invest in their employees and structures are more attractive to firms like his.
It’s never too late to start planning for the future, because it may be here before you know it.
Publication date: 6/5/2017
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