Pictured from left; Brian Corbett, Tom Fochtman, Ron Edmonds
Tom Fochtman, CEO of Ceibass Venture Partners, Brian Corbett, managing partner of CCG Advisors, and Ron Edmonds, principal consultant at The Principium Group, all agree that the market has never been better for those looking to sell their landscaping business.
“The market is frothy right now,” Fochtman says. “We’ve had private equity, but not like this.”
In Denver, the panelists shared a few important tips to consider if you’re thinking about selling in the current market.
1) Don’t wait. If you’re in selling mode, you want to be on top of things right now. “Leveraging will be a little tougher, rates are up a bit. I think this run will last a few more years. Don’t be waiting, be on it,” Fochtman says.
In our May issue, we reported that the boom in the economy won’t last forever, but the panelists all agreed there’s still time to secure a decent sale. Right now, Corbett says the holding period for private equity firms is four to seven years, which will offer a cushion to businesses looking to sell before the projected 2020 economic recession.
2) Talk to your employees. If you’re in the process of selling a business, employees may be concerned with how the sale will impact their jobs. The panelists all recommended being open with your employees. “Your business is really only your employees and your customers,” Edmonds says. “That’s a major task that the buyer has, coming up with an action plan.”
Corbett recommends sitting down with your employees once the sale is finished, and explaining what you (the owner) did, why you did it and how it will impact them. He also says to wait a day or two to bring the new owner on board so that employees have time to process the change.
3) Do your due diligence. In prepping for a sale, it’s up to the owner to ensure all their ducks are in a row. “There’s unlimited opportunity for hiccups, the biggest issue that comes up is inability to hold up to scrutiny,” Edmonds says.
One of the biggest hang-ups when it comes to selling is ensuring your labor force and the paperwork that goes with that are legally sound. Fochtman says he sees buyers bring in a labor attorney and go through every single I-9 on file, and if there’s ever a doubt, they may pull away from the deal. He would like to see every company using E-Verify to make it easier, and if necessary, using the H-2B process to find foreign workers.