When one wants to sell a business

[daytona°]

Is there a rule of thumb to the askling price?

[Rick Blaine]

I suppose it depends on the location, type of business, condition of the books and a host of other factors. You might want to contact a local business broker and see what they say.

-- "Tell me what I should do, Annie." "Stay. Here. Forever." - Life On Mars

[daytona°]

[Jake]

I've looked at this scenario more than once... any business owner who is successful and large enough will.

There are 'old' rules-of-thumb.... which I won't mention because... frankly.. they don't apply anymore.

Solid customer base, along with assets.... establish the value. As with everything else anymore, "it's only worth what someone will pay!".

Talk to a broker that deals with your type of business. There are national outfits that specialize in such things. The most cash comes from big-boys wanting to move into new geographical areas or eliminate competition.

I have a division of Emerson Electric barking at my door occasionally. A broker contacted me about their interests. Eventually, if we continue to do well... the price might get high enough. Right now it's not... but I have a lot of dough in vehicles and equipment that are marketable 'elesewhere'... plus... it would have to be "f*ck-you" money at this point... an incredible premium.

Either I'll get it or retire a bitter, broke and tired old guy in 20 years with nothing but war stories (-;. That's the gamble you take... and I'm taking it....

Jake

[Bob Pietrangelo]

Lots of them. 5 times net, # of agreements, assets, you also have to figure if you are buying a wall 1-2 business that the customers are there for the owner and you may lose a large portion of them from a management change

[gofish]

J- If you are a member of SRT ($50.00 a month is chickenfeed) there are numerous industry wide 'coaches' , 'consultants', and 'advisors' as well as one heck of a lot of resi & commercial hvac contractors to pose your question to. You never know, there may be a SRT member shop local to you thats looking to expand...

[Bubba]

[daytona°]

Excellent Bubba

Service Agreements - NONE...never believed in them for the 33 years I have been in business. I do have a reasoning for this Customer Base - 2800 customers on the books....most likely 65% repeat customers. A few large Real Estates as customers...brings steady business My Phone number - they can have it Company name - They can have that....they won't keep it long Tools & Trucks...have value anywhere My building ....very profitable...it brings enough to offset just about anything...10 units...4 commercial (I take up 2) and 6 nice apts located on MAIN highway

[Bubba]

Too bad. Its not "what you believe in" its "what sells". Service Agreement customers mean an almost 100% in the bank customer for the term of the agreement to the new purchaser and CUSTOMERS are what the new company wants. A customer base is great but without anything to tie that customer to the new owner, 50% (pulled that # outta my ass) of those "customer base customers" may just leave.

BUT NOT what you think they are worth..........especially the tools.

Your building sounds like an awesome good thing but the purchasing company may already have a business location. Nevertheless, it sounds like you have a very nice piece of real estate someone will be interested in. Good Luck.

Bubba

[HomerS]

The hard assets must be valued individually and is not a problem, just time consuming, so start making a list.

The value of your business is determined after you let the buyer or representative look at your books for the last few years. You can usually figure the value as a multiple of 2 to 4 times gross NET annual income. So if you have had a gross net of 80,000 before your imaginitive tax calculations, then your business is worth about 160k to 320k plus all the used assets value.

Intangibles such as good will are impossible to value which is why the multiple of gross net is so attactive.

HomerS .

[Bubba]

Homer, Your post is late and your calcs are way off? Have you actually sold a hvac business before? Here's a big big clue. When you go to sell a hvac company there is not a list of 50 companies beating a path to your door to hand you a million dollar check. If you are lucky, you will find ONE company/person interested. I got even luckier. I had two. One was very interested and was ready to hand me that check almost immediately. Only problem was, it wasnt a million or even close. The other co was interested but kept dragging their feet. I wasnt interested in waiting a few months. It was gone in less than a week. Bottom line is, ........your company is worth what the buyer is willing to pay. Bubba

[daytona°]

I see your point....(coming late now) since Homer chimed in. The building (no doubt) I would want to sell separately at this point.But if it goes at the sell of the business...so be it. But when one is buying a business, they are basically buying a job. So how much do they want to spend to work? I have my eye on another business (with the wife's blessing) and it does not require 24/7 attention. Just getting tired of all the BS with the public and employees....NO WHAT I MEAN??? JB

Yes ... I am a top poster...I hate scrolling all they way to bottom...or even yet...reading between the lines and paragraphs