The perfect business doesn’t exist. And savvy buyers are not looking for a company that gets everything right. They’re looking for a company that meets their goals and one where they can make the numbers work for them.
Strategic buyers are looking for businesses that complement their existing company, expand their territory, or give them the chance to offer more or different services. They may already have infrastructure in place to do billing and sales, so they’ll benefit from economies of scale. So if your company has value to them, they’ll still consider making an offer.
Here are the assets you might have that will attract buyers.
Equipment and technology
You may have vehicles, lawn equipment, an inventory of irrigation supplies, and other physical assets that a buyer would want to acquire. You’ll have a better chance of getting a higher offer for your company if your equipment is well-maintained and in good condition. A relatively small investment in repair or maintenance can pay off in multiples when you sell the company. Leased equipment and vehicle loans must be paid off (handled at closing) so you can transfer them to the new owner.
A stable, reliable workforce and/or specialized talent
A buyer is also acquiring your workforce; they’ll be looking for crews that can be relied on to show up and supervisors who are competent and well-trained. If you have to oversee every job and handle every little problem, it’s a red flag. Buyers want to know that the company can run smoothly without the owner’s constant involvement.
A buyer will also be very interested in acquiring specialized skills. If you have the best irrigation guy in town or a certified arborist on staff, for example, that will make your company more attractive and valuable to a buyer.
A diversified base of repeat and profitable customers
If your company’s revenues depend on just a couple of big accounts, your business may not be sellable. A new owner needs to know that losing one or two customers won’t put them out of business. Smart buyers are looking for a broad base of customers that provide year-round, stable income. Everyone in the business understands seasonality, but if you have agreements in place that keep your crews working throughout the year, your business will be much more attractive and command a higher selling price.
It also matters, of course, that you’re making money. Cash flow and profitability are two of the most important concerns when acquiring a business.
Books and records
Accurate financial records and customer information tell a story about the health of your business. It gives the buyer confidence that what you are telling them is true. It’s tempting to run personal expenses through the business, but don’t do it. You’ll be paid more when it’s time to sell than you will save with taxes.
Buyers will use your financial data to forecast the future and base their offer. Without this vital information, your business may be unsellable or, at best, less valued. Find a good accounting tool like Quickbooks and stay on it! Your future self will thank you.
A strong brand and reputation for great customer service
Buyers will check out your website, social media presence, and online reviews before making an offer. They’ll be looking for positive comments and testimonials from long-term customers and people who were thrilled with your work. If they don’t find any reviews, or see a lot of complaints from unhappy customers, they’ll probably pass on making an offer. No one wants to pay to acquire unhappy customers who think the company doesn’t do its job.
This, too, is worth some investment on your part. Being able to be found on the web is an important part of growing the business. For a relatively small investment, you can get your website updated and optimized for Google searches. You can start asking your long-term customers (and new ones) to leave Google reviews. This boosts your reputation and findability when a potential customer looks for a new company.
Your company doesn’t have to be perfect to sell; it just needs to be the right fit for the right buyer at the right time.
If you are curious about what your business is worth, we offer a complimentary and confidential opinion of value.
About the author: Jim Parker
Jim Parker is an experienced business broker specializing in lawn and landscape businesses. His company is based in Clermont, Florida. As an industry leader, he has served as the past president of the Business Brokers of Florida and currently sits on the International Business Brokers Association’s Board of Governors. Jim is a sought-after speaker who he teaches others in his industry best practices in ethics, closing transactions, and finding qualified buyers. He has earned over 50 awards and recognitions in his career.
He is a Certified Business Intermediary (CBI), Certified Mergers and Acquisition Professional (CMAP), Masters Certified Business Intermediary (MCBI), and is a Mergers & Acquisitions Master Intermediary (M&AMI. He is one of one of less than 20 business intermediaries in the world that have all four of these designations. To contact Jim, visit TheLawnBoss.com or call (407) 927-8999.