The Right Way of Selling an Electrical Business
If you have recently been wondering how to sell your electrical business, you obviously have a lot to consider. You might want to keep the business for a while, or even keep it long enough to pass it down to someone in your family.
You have worked hard to get your business to this point, and you might not be ready to give it up just yet.
If you have an inkling to sell, now might be a great time.
The electrical contractors market is growing, and is projected to keep growing at a rate of 3.94% between 2022-2028. With this information about a positive trajectory in your pocket, you might think it is time to sell your electrical business. So how can you decide if it is the right time? The checklist below will help you discern if it is time to move on from your beloved business.
Why Work With Brentwood Growth
Access to Buyers
Over 400 private equity firms and consolidators that are actively looking to purchase.
Confidentiality
Ensure the sale of your business remains confidential to avoid disruptions for you.
Industry Expertise
More than 20 acquisitions with transactions from $80 million with an average of $4 million.
Valuation
Learn the value of your business and receive support with pricing to the market.
Negotiation
As your mediator, we work with you and the buyers to make sure both parties are satisfied.
Experience
Lead by a team with 75+ years of experience. Our experience ensures a smooth experience.
Do You Know What Your Business is Worth?
Follow Your dreams
If you think it might be time to sell your electrical business, start with yourself. Maybe your spouse is retiring, or you are slowing down, or you just think it is time to get out of the business. Perhaps you are just ready for a change, to get into another business, go traveling, or move into other hobbies. Whatever the reason, study your personal goals to determine if it is time for you to sell your electrical business.
Study the Industry
After you take a look at yourself, take a look at the industry. What is the current climate like? Electrical businesses are currently on the upswing, so you might want to sell your company at its peak. Or maybe you want to hang onto it because you are making a solid income. You need to consider labor costs, availability of quality workers, and how easy it is to run your business if you are thinking about selling electrical business.
Analyze Your Timing
There are basically three timing scales if you are thinking about how to sell my electrical business. Some people are ready to sell immediately, and want to be totally out in 6-12 months. The second type of seller is interested in being totally out in the next five years, but would like to hang on to part of the business until then. Finally, the third group of interested sellers is looking far down the road and preparing to sell in over five years. Obviously, if you sell an electrical business immediately, versus selling it years down the road, you need to approach the sale differently.
Take Stock of the Value
Consider asking “Should I be selling my electrical business?” when the performance or value of the business reaches a certain level. If your company has a lot of value, is growing at a steady rate with a solid cash flow, then buyers will be more interested. Sometimes the job of selling is even easier when buyers hone in on electrical businesses as they look for good investments. The growth will keep the buyers interested, and that will help your bottom line.
Look Into the Current Conditions
The current economic conditions are always a good indicator of whether or not it is time to sell your electrical business. Consider geographic growth, the ability and interest in diversifying, your recruiting and training process, and other elements that will create a competitive advantage for you. You also might consider selling your electrical business if a recession is on the horizon, inflation takes hold, or continued supply chain issues cause trouble for your electrical business.
Figure out your family
If you own a beloved electrical business that has been passed down by your family, or that you have built with your own blood, sweat, and tears, you may have assumed that you would pass down your company to a family member. But maybe you didn’t end up having children, or maybe your family is not interested in running the company, so you might feel like you are back to square one. It is hard for staff and management to muster the business acumen needed to run your company, so you might have to sell it to a stranger.
Full Sale
As the name implies, in a full sale you will sell 100% of your business, stay on for a short transition time, and then get out of the business entirely. The sale itself can take 6-9 months, while the transition period can last up to 2 years. In order to sell electrical business, you and the buyer will outline your responsibilities and your expected compensation. A full sale is good for electrical business owners who have decided that they are ready to be completely done with their business.
Partial Sale
Unlike the full sale, a partial sale will see you selling approximately 70-80 percent of your business, but retaining an equity ownership. In this partnership, both the buyer and seller will work together to grow the business, with the goal of handing over the reins completely in 2-5 years. In this scenario, you are able to save some money but also stay involved in the business that you love. Then, 2-5 years down the road you can take a “second bite of the apple” and complete the sale.
Future Sale
If your business is still life-giving for you, and you are looking to sell your electrical business five or more years down the road, the number one thing you can do today is maximize the value of your business. Pay special attention to the overall profitability of your business, as well as the cash flow. More cash flow increases the multiples and leads to a higher valuation when you finally do sell your electrical business.
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