Before You Sell Your Business, 5 Important Things to Know: #1 Seek Mutual Fit
Before you sell your business, whether you own a home services company or you’re in a completely different industry, there are 5 important things you should first understand. Follow along in this 5-part blog series as we discuss each of the topics.
Selling a Successful Home Services Business
When Jeff Martin decided to join the Friendly Group, it was the culmination of a several-year process that began and ended with finding the right fit for him, his employees, and his customers.
Jeff Martin, owner of Day & Night Air Conditioning, Heating & Plumbing, has been in the home services industry for over 40 years and built a successful company on solid principles with a strong focus on building relationships with employees, customers, and the community. Jeff’s HVAC and plumbing business has a loyal customer base, a strong brand reputation with thousands of five-star reviews, and has been recognized by the Better Business Bureau as a Torch Awards winner for Ethics.
High quality companies like Day & Night are often approached by buyers interested in acquiring their business. When you do decide to engage with potential buyers, it is important that you know what you are looking for to get the results you want & deserve.
As we discuss each of the 5 important things to know before you sell your business, starting with #1: Seek Mutual Fit, we encourage you to reach out here if you have any questions or would like to connect with us.
5 Important Things to Know Before You Sell Your Business:
- Seek Mutual Fit
- Understand the Sales Process
- Get an Accurate Valuation
- Put Together a Good Support Team
- Choose the Right Exit (or not) for YOU
#1: Seek Mutual Fit
First on our list of things to know before you sell your business is “Seek Mutual Fit”. Mutual fit involves understanding intentions and going through the process of making sure there is critical alignment – alignment around the vision for the company, values, and expectations, for you and for the buyer.
Friendly Group and Day & Night both emphasize evaluating mutual fit. Jeff Martin says one of the most important steps when selling your business is to assess compatibility between you and the buyer.
“This step is an ongoing evaluation throughout the entire buyout process to make sure you understand the buyer’s motives, are clear about your own values and goals, and that everything is aligned and consistent.” Jeff stated. “I wanted to find the right home for my employees and customers and do what’s best for the company’s future growth while realizing my goals for the next stage of my personal and professional development.”
Know What You Want
Before you can evaluate your potential buyer/partner, and truly know if they are a good fit, it is important to identify strategic goals for yourself and your business.
Take the time to reflect on what means the most to you and what you want. If you are looking to play an active role in the company after you sell, ask yourself:
- What do I enjoy doing and what could I do without?
- What role do I hope to play in business operations after joining a group?
- How hands-on do I want to stay?
- Where do I need help and what value can I bring to a larger organization?
- Do I want to take my foot off the gas?
- Do I want to share my risk with someone else?
The more honest you are with yourself, the happier you will be with the result.
Focus on the “How” and “Why”
- How do you get things done, and how does the buyer? Are the differences meaningful or superficial?
- What legacy do you want to leave at your company and in your community?
- Do your values align?
- What are the buyer’s intentions and goals for the company?
You will want to compare your organizational philosophy (your why) to that of the buyer before you sell your business.
A personal connection with the buyer is crucial, as these are the people you and your employees will be working with in the future. Take time to reflect on your own business and evaluate your potential buyer. Cultural alignment is key to a positive outcome when transitioning ownership.
Jeff Martin took two years to get to know the Friendly Group and its leadership team. “The more I got to know them and their intentions, the more I liked them. That was the green light for me,” noted Jeff.
One of the major “mutual fit” indicators Friendly Group looks for in a potential partner company is the strength of the brand. We know that a strong brand takes time and hard work, and often, it stems from a solid culture with sound leaders who value and care for their employees, their customers, and their local community.
When evaluating Day & Night, the relationships they had with their customers and their community really stood out. The people and culture behind their success are the reason for the strength of their brand.
Pro Tip: Get References
Another helpful way to gauge mutual fit before you sell your business is to get references.
What was the experience of other companies the buyer has acquired? Ask to speak with one (or more) of their current operators to get their perspective.
Jeff said, “the opportunity to speak to all the owners who chose to join the Friendly Group before me really helped solidify my decision.”
Jeff especially remembers the conversation he had with Steve Lewis of Ambient Edge, another Friendly Group company. “Steve was a great resource and extremely helpful in answering my questions, providing advice from an owner’s perspective.”
Don’t get into a hurry to sell then neglect doing your homework. Two or three months of due diligence and asking questions now could save you years of headaches and distress.
What to Do Next
After you have determined the mutual fit of a potential buyer, the next step is understanding the sales process. Stay tuned for our next installment in this blog series as we break down each step to help you learn what to expect when selling your business.
If you have any questions or would like to start a conversation you can reach out here. We would be happy to connect with you!
Friendly Group is Growing
As we expand our network of home services companies across the United States, we’re looking for owners who want the transition of their organization into the Friendly Group to be a conversation, not a transaction.
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