Managing Buyer Risk To Sell Fred’s Trade Business
If at first you don’t succeed, try Bonza!
Fred contacted Bonza Business & Franchise Sales after he had been listed with another broker for over 12 months and had no luck in selling his specialised window cleaning business.
At Bonza we understand that selling a trade company or niche service business can be complex at times, it all comes down to expert marketing and professional representation.
Whether it’s plumbing, electrical, building and construction or a specialised window cleaning business, many factors contribute to the eventual sale.
You put a lot into your business, and much of that effort is focused on creating a strong relationship with your customers and a solid reputation with the public. This goodwill is an essential part of the selling process, but it’s also notoriously difficult to measure.
When it comes to accurately pricing and selling a trade business you first need to determine whether or not the business operates with its own internal management structure or if it is reliant on the owner to keep it running. In Fred’s instance, his window cleaning business relied mostly on his skill, and expertise and the goodwill on offer was square with the personal reputation he had with his regular clients, not the business name.
A lot of the selling and buying process is about risk. The riskier the deal, the less the asking price will be. Fred had a price goal in mind, and it came down to our skilled broker Sean to sell the business’s great value and attempt to diminish any potential risk to the buyer that showed interest in purchasing the business.
Because the success of trades businesses is so dependent on the needs of customers and clients, it must be determined whether or not those client relationships are transferable/maintainable during the sale process. Bonza’s broker Sean encouraged multiple one-on-one meetings with the buyer and Fred to build rapport with the view of a smoother transition, knowing that a complex deal was going to be put on the table. In this instance, the buyer was being guided by business coaches and accountants at each step of the way.
To meet the challenge of the goodwill difficulty and increased conditions set by the buyer, Sean guided Fred through the proposed structured settlement payments, extended tuition periods and greater than normal restraint of trade conditions that had been proposed.
Sometimes with a business that is so highly skilled, that relies so heavily on the goodwill of the seller’s individual name, we must set the seller’s expectations from the start and explain to them that there may only be one buyer. Fred understood this and was over the moon with the result and the entire sales process.
