Selling a family-owned business can be fraught with worries. But it doesn’t have to be. Here are the first steps in selling a facilities maintenance company, along with expert tips for how to sell a family business.
Deciding to Sell
Making the decision to sell usually has on of the following catalysts:
- Desire to retire
- Financial pressures
- Difficulty staying competitive
- Other career interests
These concerns often overlap, such as when an owner needs the funds from selling their business in order to retire.
Getting Family Members on Board
The next step is convincing relatives to sell.
Sole Decision Maker
In this scenario, you hold all the cards. Family members may not be happy about selling, but they don’t have a say.
One complication is family members who work for the business. The transition will go more smoothly if you can help with this. It may be possible for them to stay on with the new owners, or you can offer them recommendations in seeking employment. A bonus if the sale goes through is another incentive.
Equal Partnership
Have a partner that needs persuading? Maybe they’re also ready to work less but have been reluctant to raise the subject.
Sometimes the promise of freedom that a sale brings is enticing to a sibling or cousin. One way to reassure a partner that selling could be lucrative is to have the business appraised.
Silent Shares
Some family businesses have one member who directs day-to-day operations, while others have shares in the profits and vote on major decisions. This can be tricky when:
- Shareholders don’t agree with each other
- Corporate bylaws need changing to sell
- State laws regulate shareholder contracts
- Fears about an internal legal battle
Solutions include consulting an attorney and buying out shareholders to control the selling decision. As with a partnership, discovering the surprising value of the company and possible profits may get others to say yes.
Assessing Market Timing
The best time to sell a small business is during a thriving market. It’s a disaster to wait too long due to disagreements or hoping for an inheritor. The market tanks, and you miss out on a golden opportunity.
Downturns in the economy aren’t just national; they can occur on the local level too. Watch out for signs that your market is shifting, such as:
- Area businesses closing
- Customer base dwindling
- Consumer debt defaults
- Rental properties sitting idle
- Difficulty obtaining loans
Don’t delay, or you risk business devaluation.
Making the Business as Financially Healthy as Possible
Selling a service business requires tip-top financial health for the greatest ROI, which in turn helps get family members on board.
How can you improve your financial picture?
- Pay down debt, and raise your credit profile.
- Reduce operating costs, and cut waste.
- Increase revenue through higher fees or more customers.
- Keep reviews high and your reputation strong.
- Show a trend of long-term growth with future potential.
A CPA can assist you with preparing profit and loss statements and audits, which buyers may request.
Selling a family facilities maintenance company can be an emotional process. But at the end of the day, it’s still a business decision and must be treated as such. Help your family see this, and you’re likely to gain agreement faster.
Thinking about selling your family service business? The Batallan Group welcomes the opportunity to confer with you as key players in maintenance business acquisitions. Get in touch to learn more.