There are two types of business sales in the field service industry. One kind is a stress sale, where businesses are basically given away because the owners never gave thought to an exit strategy until it was too late. The other is a premium sale, where the business is sold based on assets plus three to five times pre-tax earnings. To receive a premium, the owner must begin working on his exit strategy years before he will need it. The problem is that often the business owner will have an overinflated view of what his company is worth, and how quickly he will get paid. From the moment you go into business you should be planning how to maximize your value to avoid becoming a risky business.
Here are the elements of a successful exit strategy for field service contractors:
Profitability – Can you accurately prove the profitability and cash flow of your maintenance contracts? If your business management system does not properly allocate costs against the work orders and contracts, your valuation will be subject to discounting.
Automated Business Processes – Is your business dependant on manual processes from key administrative employees? While every successful business has key employees, if your business processes are manual or dependant on multiple disconnected software products, you will take a hit on the cost to transition your operation to something more streamlined. Buyers will also discount your valuation because you are not operating as profitably as you could be.
Low Risk – If you are using manual or disconnected software systems, buyers will discount your valuation or lock you in longer to make sure that when they take over, there are no surprises that only the owner can deal with. Businesses with documented processes are a lot less dependant on the owner or the people who are loyal to him.
Riskier businesses are less attractive and draw a lower price than efficiently run businesses who use a comprehensive field service management software to take the guesswork out of valuating your business. Contractors whose operations systems are not properly connected to what is happening in the field or in the back office always pay a price when it is time to defend their valuation. If you plan on selling your field service business one day, investing in a system now that shows you are connected to and in control of your operation will help you obtain a better selling price and a shorter transition commitment.
FIELDBOSS is a comprehensive field service software solution designed to continuously expose the vital signs of your business. If you’re thinking about selling your field service business, let us help you create a profitable business that will be appealing to acquisition candidates and sell quickly for an attractive profit. Contact us here.This entry was posted in Elevators, HVAC and tagged Exit Strategy, Premium Sale on .