For small to mid-size pest control business owners, many of whom are sole owners, the time will eventually come when they may want to exit their business. For whatever reason, be it retirement, future growth or another reason, these owners deemed it time to step away. For most, an exit will involve a sale of their interest, either a partial stake or a full sale. However, there are several things to consider when exiting a business besides the price.
Here are seven things to consider when exiting your pest control business:
- Timing – Is this the right time to exit your business? Despite a challenging 2020 and remaining broader market headwinds in 2021, we are seeing an uptick in mergers and acquisitions in certain industries which makes it a seller’s market. From a valuation standpoint, now may be a good time to sell your business. Maybe retirement is looming on the horizon and you are looking to strengthen your financial position. Or you have grown your business as much as you can and need a larger company to continue its growth. Whatever the reason, consider the timing of your exit before you decide to sell.
- What’s next? – Do you want to remain with the business going forward or are you retiring 100 percent? For most small to mid-size business owners, a sale of the company becomes a life-changing event in terms of personal wealth.
- Selling your stake – For most business owners, much of their net worth is tied up in their business, so an exit usually takes the form of a sale of all or part of their stake in the company. Decide how much you want to sell and find the right consultants to help through that process.
- Customer relationships – What will become of your customers? How will they be treated by the new business owners? Is your reputation at stake with the potential sale of a business?
Make a full or partial exit – Are you looking to retain a stake in your business? Maybe you are looking for another investor to help increase working capital for additional growth? Decide which you prefer before you enter into negotiations with a potential buyer.
- Buyer financing – How will the buyer fund the purchase of your stake? Will this be an equity sale or a leveraged buyout? Additionally, you’ll want to consider how and when will you receive the funds from the sale?
- What do you want for your people? – What future do you want for your people in the business? Are there family considerations that need to be addressed? Do you have a succession plan already in place?
While the price of the business certainly is an important aspect of the transaction, there are several more considerations to make when deciding to exit your pest control business. If you need a trusted consultant to facilitate this process, we would be happy and honored to help.
Dena Jalbert is founder and CEO of Align Business Advisory Services, Winter Park, Fla., a team of former business owners, operators, and executives who leverage their experience and extensive network to maximize the value of their clients’ businesses. Expertise includes mergers and acquisitions, management consulting, business strategy, and finance. They can be found online at www.alignba.com.
Article originally published March 5th, 2021, in PMP Pest Talk