Unprepared Owners Will Never Sell Their Business For What It's Worth

When selling a distributorship or contract cleaning business, transactions require agreement on a broad number of items, from price to deal and legal terms to a general sense of trust that each side develops in the other. An owner who has unrealistic expectations of the acceptable price and terms or who makes unreasonable demands during the negotiation will find it very difficult to reach agreement with a buyer.

It should be obvious why unrealistic pricing expectations can kill deals, yet this prevails as the most common offense. There are many dangers of improperly pricing a business for sale, but unfortunately most owners enter the process without an accurate understanding of their company’s fair market value.

But problems doesn’t end with price, as disagreements over deal terms can be equally as detrimental to your success. To succeed, you need to understand the usual and customary terms that apply to companies within the janitorial industry.

Why do so many owners make these mistakes? It’s really just a lack of preparation. Most don’t want to pay for a professional valuation, and many would rather try to sell the company on their own than hire a business broker. The “fortunate” among this group end up selling, but it takes two to three years rather than the customary six to nine months, and most of them accept a price that is below fair market value.

In order to succeed (i.e. actually close a transaction at fair market value in a reasonable period of time), owners must be cognizant of these critical items. How? The easiest and most affordable way is to hire a business broker with expertise in the janitorial industry.

Peter Holton is the Managing Director for Caber Hill Advisors and has been in the service industry for nearly 20 years and is well known and respected throughout facility maintenance industry. He manages the firm's practice facility maintenance sectors. Peter offers valuations, exit planning, consulting and buying or selling business. He has performed numerous speaking engagements for organizations such as ISSA and BSCAI. He can be reached at peter@caberhill.com or by visiting www.caberhill.com.