Savvy Strategies for Selling Your Construction Company
Your company has likely been your main focus for years. You have built the business and seen it through ups and downs. However, if you have reached a point where you are ready to sell, there are steps you should take to protect yourself and get the best deal.
Create Your Support Team
Selling your company is not something you should try to accomplish alone. You need the advice and expertise of professionals to help you make the wisest decisions.
If you do not already have one, hire an accountant. This person can review your financials and ensure their accuracy.
A broker can help you set the right price for your company and market it for buyers. Work with one to negotiate the right price.
Be sure to enlist legal services. An experienced attorney can review sales proposals, ensure contracts are clear, and minimize your risk in the sales process.
Do Your Research
Working with your broker, research the value of your company. Your company is undoubtedly worth so much to you and your family, but try to step back and look objectively at its financial health and its place in your local market. You can consider your business with an income-based method, which considers your cash flow, assets, and capitalization of earnings. You could also use a market-based method, which entails researching what other businesses similar to yours have recently sold for. This process involves determining a price multiple for comps in your area, then using that for your business. You calculate a price multiple by dividing a company’s recent selling price by its annual earnings. Your accountant and broker can guide you in gathering this information.
Once you have started the process, think about your timing. Do you need to sell as soon as possible? Or, if you are retiring, do you want to take some time for the transition? Either way, sell a goal date and work toward it. In most cases, sales timelines require at least six months, but work with your broker to determine what is right for you.
Consider Potential Buyers
Will your sale be private or public? Depending on your situation, you may want a confidential deal. With this approach, you can sidestep the inevitable concerns of customers, employees, and vendors. Your broker can post a blind listing for your business and have potential buyers sign nondisclosure agreements. With your permission, your broker could also discuss your sales plans with people you trust in your community. They could suggest possible buyers while keeping your plans confidential.
If you choose a public sale, you might have an easier time finding a buyer. For instance, another construction company might want to purchase yours to grow their business. You might also find potential buyers within your own company or from a private equity firm.
Make It Official
You may receive multiple offers from various sources. Take the time to review all your options, and talk through the details with your broker, attorney, and accountant. Do not rush the negotiation process. Once everything is finalized, it could take a few months to close the deal.
In the meantime, finish up your open projects and begin the transition for your buyer. At this point, you will want to talk to your customers, employees, and vendors. Some may find a place with the new buyer, while others might move on. This process can be challenging, but try to remain professional and objective.
Once your deal is complete, you will probably feel relieved, but you will likely experience worries and doubt along the way. Do not hesitate to discuss those concerns with the professional team supporting you. They can help you weigh all your options and make decisions based on your best interests.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.