3 Steps to a Successful Sale - Morgan & Westfield

POMPANO BEACH, Fla. - June 27, 2017 - PRLog -- You have worked long and hard for decades to build your landscaping company. The grass is now greener on the other side, you are burned out, considering retirement or starting a business in another industry. Just how likely is it that you can exit your landscape business and reap the rewards of decades of hard work? Is the grass really greener on the other side or is this a myth?

Let's face it. Acquisitions are common in the landscaping industry. Because the industry is mature, growth is difficult to create organically. Most mature competitors realize this and buy growth, or grow via acquisitions. How likely is it that you can sell your landscape business to a competitor? What can you do to prepare your business for sale and maximize the purchase price?

I have been helping business owners sell their companies for over 15 years, and I have seen a considerable number of business owners making the same mistakes repeatedly. So, I designed a simple 3-step framework to help you successfully sell your landscape business.

Step 1 – Prepare for the sale

The first step is to properly prepare your business for sale.

Ask yourself: "Do I want to maximize the purchase price, or am I OK just getting what my business is worth in its current state?"

If your goal is to maximize the purchase price, then begin with the first step and complete the checklist before you consider selling your business. If you do not want to maximize the purchase price, then you may skip Step 1 and proceed to

Step 2.

Preparation involves a lot of hard work, and if you are already burned out, you might not have the energy to do the work it takes to properly prepare for the sale. You can implement some quick fixes; however, proper preparation requires more time and energy.

Preparing your business for sale requires focus so you don't become overwhelmed. Seeking help from a professional advisor, mentor or expert can be immensely helpful during this stage because the advisor can help you maintain focus on those elements that will have the biggest impact.

Prioritizing is also paramount because one simple step may have a greater impact on valuation than all the other steps combined.

Here's a prioritized checklist of steps you can take to prepare your business for sale:

1.     Increase revenues – The higher your revenues, the more likely that a competitor will buy you out. If you are a small landscaping company with fewer than 5-10 employees, then you are only selling a job, not a business. According to a research by IBISWorld, there are nearly half a million landscaping companies in the U.S. Based on my experience, 90 percent of these companies do not make suitable acquisition targets because their revenues are too small.

2.     Obtain a valuation – Hire an expert to value your company so you can determine the current valuation and the gap you must close to meet your goals. Doing so gives you a clear target to aim for.

3.     Increase recurring and repeat revenue – Contract-based work from a repeat customer base that results in recurring revenue is like honey to bees for your competitors. Build as much recurring revenue as possible.

4.     Raise prices – Don't talk about raising prices, do it now. 100% of your price increase will fall to the bottom line (in your pocket), which will immediately increase the value of your business.

5.     Build a strong management team – A strong management team can be relied upon in growing your business. The higher your revenues and the more infrastructure your business has, the easier your business will be to sell. Larger companies are always easier to sell in the industry than smaller businesses.

6.     Consider your customer base – Acquirers will closely critique your customer base. Landscaping companies with certain customer bases make much more attractive acquisition candidates. Generally, the niches with less competition, repeat work and higher prices command higher company valuations, and these tend to be in the commercial areas.

7.     Build your team of experts – Make sure you have an experienced attorney and CPA on board. Having these experts on your team is an expense, but they may help you increase the sales proceeds and thus pay for themselves.

Your attorney can help you prepare your company for sale from a legal standpoint and advise whether your business is prepared for due diligence.

Your CPA can ensure your numbers are in order before you put your company on the market.

8.     Ride the wave, but time your exit – The recent growth in the housing market and the increase in disposable income equals more industry demand. If you can, time your exit during the peak times of the industry. Valuation multiples drop as industry demand declines.

9.     Accept industry trends - Labor shortages, rising health insurance costs and competitors that offer low prices will continue to be challenges in the industry. Don't waste time fighting these tsunamis. Instead, focus your time on what you can change.

10.    Plan your retirement - If you are considering retirement, meet with your tax planner and financial advisor to discuss the tax implications of the sale and determine if you can retire and live on the sales proceeds.  http://www.morganandwestfield.com