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Best way to sell this business

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noweare

New Contributor
Sep 29, 2020
5
2
11
New Hampshire
Hello all,

I have run my own business for 12 years and for the last 8 years
have been installing epoxy coatings. I want to move on to something
else and looking for feedback on the best way to sell it.

As a rule there is not a lot of repeat business. Customers are not put
on a schedule for future business as in carpet cleaning, snow removal,
lawn care etc..

I did talk to a business broker and he said people looking to purchase
a business want to see a cash flow due to repeat business. Not having
much repeat business it would be hard to find a buyer because they
want to see a dependable cash flow.

Part of the value of the business is the equipment and tools that would
be purchased by the buyer at fair market rate.

The most valuable thing is my knowledge of
the business, quoting and installation the different types of coatings.
Basically how to make money on jobs and stay out of trouble.

My proposal would be I charge them a lump sum for equipment and basic training.
Any training after that would be pay as you go. For example, training them
on real jobs that they get, help in quoting jobs, etc...
I would charge them a daily rate for the additional training.

I have never sold a company before and talking to the broker he said
it would be a hard business to sell. So I am thinking this is one
way to do it.

Any other ideas ?
 

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Johnny boy

Platinum Contributor
Speedway Pass
May 9, 2017
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Washington State
Well hey I am looking to buy a business.

But for something like this I would only agree to spreading it out over payments, not a lump sum.

Send me some details about it.
 

noweare

New Contributor
Sep 29, 2020
5
2
11
New Hampshire
Well hey I am looking to buy a business.

But for something like this I would only agree to spreading it out over payments, not a lump sum.

Send me some details about it.
Because of the training part it would have to be a local buyer. Otherwise your just buying equipment.
 

GoodluckChuck

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Hello all,

I have run my own business for 12 years and for the last 8 years
have been installing epoxy coatings. I want to move on to something
else and looking for feedback on the best way to sell it.

As a rule there is not a lot of repeat business. Customers are not put
on a schedule for future business as in carpet cleaning, snow removal,
lawn care etc..

I did talk to a business broker and he said people looking to purchase
a business want to see a cash flow due to repeat business. Not having
much repeat business it would be hard to find a buyer because they
want to see a dependable cash flow.

Part of the value of the business is the equipment and tools that would
be purchased by the buyer at fair market rate.

The most valuable thing is my knowledge of
the business, quoting and installation the different types of coatings.
Basically how to make money on jobs and stay out of trouble.

My proposal would be I charge them a lump sum for equipment and basic training.
Any training after that would be pay as you go. For example, training them
on real jobs that they get, help in quoting jobs, etc...
I would charge them a daily rate for the additional training.

I have never sold a company before and talking to the broker he said
it would be a hard business to sell. So I am thinking this is one
way to do it.

Any other ideas ?

Besides the equipment and your knowledge, what else would they be buying?

Does your business have a consistent source of new customers?
Are there any employees or contractor deals in place that would be difficult to replicate?
Can someone else hop in and run the business easily without having to restructure your systems for bookkeeping, admin, marketing, etc.?

These are some areas I'm currently focusing on so that my businesses are sellable. In my construction business, perhaps the most valuable asset we have is a lead gen system that brings in enough leads to maintain and grow the business. Since that is the most common weak point of this type of business, I consider it a strong selling point.

In any business, the buyer wants to understand what they would need to do to make the business operate without you. If you can figure that out ahead of time, then you'll have something that can be sold. If you are crucial to the operation of the business, then you better sell yourself with it or nobody will buy it. I know people that agreed to be an employee on a salary for a year or two after the sale to help make sure the transition went smoothly.
 

noweare

New Contributor
Sep 29, 2020
5
2
11
New Hampshire
Besides the equipment and your knowledge, what else would they be buying?
That is all they would be buying.

Does your business have a consistent source of new customers?
Are there any employees or contractor deals in place that would be difficult to replicate?
Can someone else hop in and run the business easily without having to restructure your systems for bookkeeping, admin, marketing, etc.?
I get fairly good consistancy of work from website and word of mouth. But really believe a full time sales guy is needed to be successful and to grow the company.

There is not a lot of companies that do epoxy coatings in my area. I have been running the business part time
for the last couple of years. I get help when I need it and I do not have any full time employees. I do have a payroll service that keeps track of any help I hire and I've had them when I had full time employees. That's pretty simple too.

I use quicken to synch up my business checking and business credit card so it is pretty simple
for someone new to understand. That would also be part of the training if they need that.
Basically I will hold their hand through the areas they need help with until they are comfortable
quoting jobs and doing installs themselves.


These are some areas I'm currently focusing on so that my businesses are sellable. In my construction business, perhaps the most valuable asset we have is a lead gen system that brings in enough leads to maintain and grow the business. Since that is the most common weak point of this type of business, I consider it a strong selling point.
Yes, keeping the pipe full is important when you have employees. That's good that you found a system that provides consistant high quality leads.
In any business, the buyer wants to understand what they would need to do to make the business operate without you. If you can figure that out ahead of time, then you'll have something that can be sold. If you are crucial to the operation of the business, then you better sell yourself with it or nobody will buy it. I know people that agreed to be an employee on a salary for a year or two after the sale to help make sure the transition went smoothly.

Yes, since you are in construction you may know that coatings are a niche business. Most people including people in the trades have seen epoxy floors but don't have experience installing. That is why the sale is structured first with a cost for equipment + basic training to get them going and then on an "as needed" basis they hire me as a consultant to help them on their jobs. So what they pay depends on how fast they pick it up and how committed they are.

Thanks for your response.
 

MrTrash757

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May 31, 2020
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Besides the equipment and your knowledge, what else would they be buying?

Does your business have a consistent source of new customers?
Are there any employees or contractor deals in place that would be difficult to replicate?
Can someone else hop in and run the business easily without having to restructure your systems for bookkeeping, admin, marketing, etc.?

These are some areas I'm currently focusing on so that my businesses are sellable. In my construction business, perhaps the most valuable asset we have is a lead gen system that brings in enough leads to maintain and grow the business. Since that is the most common weak point of this type of business, I consider it a strong selling point.

In any business, the buyer wants to understand what they would need to do to make the business operate without you. If you can figure that out ahead of time, then you'll have something that can be sold. If you are crucial to the operation of the business, then you better sell yourself with it or nobody will buy it. I know people that agreed to be an employee on a salary for a year or two after the sale to help make sure the transition went smoothly.

+1 to all of this.

I’m a buyer myself and also in the business of connecting sellers and buyers informally. Here is some perspective from my side:

It is a hard sale, but not impossible. Buyers are most likely going to want to negotiate a deal with some sort of payments, so be prepared for offers of seller side or other monthly payment arrangements.

You could still get a lump sum offer though. Market is crazy right now.

Have there been any repeat customers? Perhaps a large national or international company that has asked for install jobs across multiple locations? If so, that could be a gate way to getting a partnership where you can get some exclusivity to install and potentially maintain the epoxy across a wide area. That could create some consistent revenue.

Have you thought about contractor or builder partnerships also? You mentioned a growth area in your response to @GoodluckChuck , where there are tradesmen that don’t know how to install, could be an interesting avenue to secure partnerships that could lead to consistent revenue.

Have you also gotten a valuation? I would suggest looking into that also.

Thats all I can add on right now. I think its sellable to the right person, but again, the missing consistent revenue piece makes it difficult. You could end up selling the business to a contractor, who can use it to expand their customer base and services. Just one of many examples.
 

noweare

New Contributor
Sep 29, 2020
5
2
11
New Hampshire
+1 to all of this.

I’m a buyer myself and also in the business of connecting sellers and buyers informally. Here is some perspective from my side:

It is a hard sale, but not impossible. Buyers are most likely going to want to negotiate a deal with some sort of payments, so be prepared for offers of seller side or other monthly payment arrangements.

You could still get a lump sum offer though. Market is crazy right now.

Have there been any repeat customers? Perhaps a large national or international company that has asked for install jobs across multiple locations? If so, that could be a gate way to getting a partnership where you can get some exclusivity to install and potentially maintain the epoxy across a wide area. That could create some consistent revenue.

Have you thought about contractor or builder partnerships also? You mentioned a growth area in your response to @GoodluckChuck , where there are tradesmen that don’t know how to install, could be an interesting avenue to secure partnerships that could lead to consistent revenue.

Have you also gotten a valuation? I would suggest looking into that also.

Thats all I can add on right now. I think its sellable to the right person, but again, the missing consistent revenue piece makes it difficult. You could end up selling the business to a contractor, who can use it to expand their customer base and services. Just one of many examples.

Thanks for your input. I think you are right on with your perspective. I think painting companies may be interested as it seems like a good fit for an expansion into something most people think they do anyways : ) . During a job I did have an owner of a painting company tell me he would be willing to help me for free to learn how to do installs, lol. I didn't think training a competitor for the price of a laborer was in my best interest. But who knows, I am not afraid of competition because installing epoxy is harder than it looks.

I have not gotten the company evaluated.

My used equipment is probably only worth $25K and the training would be $10-$20k depending on how much training they need. I wouldn't be adverse to monthly payments but as you can see I am not asking for much. Just want to move the equipment and get my garage back. On the other hand I also don't want to scrap the equipment either. It seems used equipment/tools are not worth much these days.

I tried a venture with a company in my area. They got the jobs and I quoted it, they marked it up. The deal was they would be trained on the job and make money doing it. Turned out they just wanted the markup and didn't really want to put resources in place to learn the trade. So there's a lot of that type of mindset for the quick buck without doing much.

Getting contracts for a business that has locations all over the U.S. is a commitment I don't want to take on. Your talking about traveling, living out of motels etc... On the road for a month at a time. I don't know if that would increase interest or drive people away. But I see your point. Not having garenteed future income is undesirable.
 

MrTrash757

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Thanks for your input. I think you are right on with your perspective. I think painting companies may be interested as it seems like a good fit for an expansion into something most people think they do anyways : ) . During a job I did have an owner of a painting company tell me he would be willing to help me for free to learn how to do installs, lol. I didn't think training a competitor for the price of a laborer was in my best interest. But who knows, I am not afraid of competition because installing epoxy is harder than it looks.

I have not gotten the company evaluated.

My used equipment is probably only worth $25K and the training would be $10-$20k depending on how much training they need. I wouldn't be adverse to monthly payments but as you can see I am not asking for much. Just want to move the equipment and get my garage back. On the other hand I also don't want to scrap the equipment either. It seems used equipment/tools are not worth much these days.

I tried a venture with a company in my area. They got the jobs and I quoted it, they marked it up. The deal was they would be trained on the job and make money doing it. Turned out they just wanted the markup and didn't really want to put resources in place to learn the trade. So there's a lot of that type of mindset for the quick buck without doing much.

Getting contracts for a business that has locations all over the U.S. is a commitment I don't want to take on. Your talking about traveling, living out of motels etc... On the road for a month at a time. I don't know if that would increase interest or drive people away. But I see your point. Not having garenteed future income is undesirable.

Interesting! That makes sense though that painting companies would be interested.

I would get a proper valuation, but I can see why you are opposed to monthly payments. Honestly at that price point that you quoted, lump sum makes a little more sense.

And a big fat oof to the venture with that other company. That blows.

Totally understandable with national companies. Its a massive commitment.

Thinking your best path forward is the competition, so they can inherit the equipment and knowledge and expand their services.
 

Mill0006

New Contributor
Sep 11, 2018
15
8
14
Thanks for your input. I think you are right on with your perspective. I think painting companies may be interested as it seems like a good fit for an expansion into something most people think they do anyways : ) . During a job I did have an owner of a painting company tell me he would be willing to help me for free to learn how to do installs, lol. I didn't think training a competitor for the price of a laborer was in my best interest. But who knows, I am not afraid of competition because installing epoxy is harder than it looks.

I have not gotten the company evaluated.

My used equipment is probably only worth $25K and the training would be $10-$20k depending on how much training they need. I wouldn't be adverse to monthly payments but as you can see I am not asking for much. Just want to move the equipment and get my garage back. On the other hand I also don't want to scrap the equipment either. It seems used equipment/tools are not worth much these days.

I tried a venture with a company in my area. They got the jobs and I quoted it, they marked it up. The deal was they would be trained on the job and make money doing it. Turned out they just wanted the markup and didn't really want to put resources in place to learn the trade. So there's a lot of that type of mindset for the quick buck without doing much.

Getting contracts for a business that has locations all over the U.S. is a commitment I don't want to take on. Your talking about traveling, living out of motels etc... On the road for a month at a time. I don't know if that would increase interest or drive people away. But I see your point. Not having garenteed future income is undesirable.
bizbuysell.com has a ton of businesses in the same type of industry/ niche as yours. I would list it there and see who responds. You really aren't asking for much so I can see you getting a few interested parties--- especially people wanting to have someone who trains them. For 10-20k, be prepared to train longer than 1-2 months.
 

ReeZ

Contributor
Oct 9, 2016
37
88
117
Any competition is probably your best bet, and then it is not a "sure case" that they would be interested in any knowledge you have. Unless you have something extraordinary which increases the effectivity by a significant enough number - I'm guessing there's just not that much interest. Of course, you could leverage any knowledge of that type to make it a "bigger sell". So that they really are buying your expertise and "efficiency system". The tools just happened to be a bonus.

From my point of view, you aren't actually selling a business you are at best, selling the tools needed for an epoxy-coating business, with the ability to consult.

Of course, do take my POV with a grain of salt - I do not know much about your trade.
 

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WaystarRoyco

Contributor
Dec 29, 2013
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70
31
Maine
@noweare are you actually running the business? I ask, because that will help to determine the market for your business.

If you are working in your business on a daily basis, performing the bulk of the tasks, then you need to find a person who is interested in your line of work. This would enable you to get the most out of your sale, but it will require you to take the bulk of the financing on to facilitate the deal. Not ideal by any means, but possibly the best of the options in my opinion.

A competitor will likely only purchase your equipment. Unless you have some sort of special method of acquiring customers, or a proprietary method of epoxy installation, they will likely believe that your process isn't any better than theirs.

As for a financial buyer, it's likely that this will not fit their profile. Financial buyers are looking to buy cashflow, not a job.

Are you sure you can't secure reasonable value for the equipment? You're not force liquidating it, so placing it in the market should allow for a reasonable return.

As far as valuation goes, typically small businesses under $5MM in revenue is going to see anywhere from 2-3.5x EBITDA, depending on owner involvement in the business. If you are doing the bulk of the work, your valuation would be toward the lower end.

If you have any questions, please feel free to reach out.
 

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