Tips for Selling a Granite Fabrication Business
Industry trends and a steady economy make it a great time to sell a fabrication business.
Granite fabrication businesses are one of the most popular businesses that buyers are looking to purchase. In the last 6 years, our firm has sold 4 granite counter businesses, and just recently sold our 5th this year. Fabrication companies are very appealing to buyers because this type of business resides in an incredibly stable industry with immense job security. Older homes are being renovated all the time and housing projects with big job requirements are popping up all over the Southeast. Material fabrication also allows entrepreneurs to use their creativity and witness the entire process of creating a product, from start to finish, for purchase.
Prior to the Great Recession, the housing market was booming. People were renovating their homes and new apartment complexes were being built every day, giving way to a robust construction economy. Industries such as counter top manufacturing were on the rise, and companies varying from “Mom & Pop” shops to larger fabrication centers were seeing tremendous growth and upwards trends. In 2009, the economy took a major downturn and several industries collapsed, one of the most remarkable being the housing market. People were no longer able to afford renovations and many businesses struggled to stay open. Now that the economy has recovered, renovation projects are on the rise and construction businesses are thriving again.
While it may feel counter intuitive, this could be the best time to sell your Granite Fabrication business. At Viking Mergers & Acquisitions, we always recommend selling a business when profits are rising and your business is doing very well, sometimes the best it has ever done. By selling when your business is at its peak performance, you can secure a better price. Increasing profits, a backlog of upcoming jobs, and evidence of growth also tells buyers that your business is a lower risk and will likely prove to be a good investment for them. If you’re thinking of selling your Granite Fabrication business, these 5 steps will help you prepare, and potentially, sell your business faster than you thought for the best price possible.
Books & Records
If you don’t already have your financials organized, it is a good idea to do so now. You will also need to begin preparing profit and loss statements and balance sheets on a monthly basis. By having your books in an orderly, easy to analyze fashion, you are conveying a sense of transparency to the buyer. Transparency builds rapport and confidence, and helps protect the seller and buyer in a transaction. The goal is to show the buyer how the business is doing and what the future holds; you do not want there to be any surprises later in the deal.
Inventory
Take this time to get your inventory current and discard anything you can deem as unsalable. Start by separating unsalable from your clean inventory and hire a local scrapping company to pick up the waste. Old, unsalable inventory is blight in a buyer’s eye; make sure you only have what’s usable left in your building.
Curb Appeal
Curb appeal is huge when it comes to buying a business, so you will want to make sure your business is as clean as possible. Once you have cleaned out old inventory, begin organizing your showroom. The showroom should be neat and orderly, with samples and good lighting. If needed, consider updating the display area. You will also want to clean up your shop. All work spaces should be as neat as possible, and all tools and machinery should be clean and without any waste nearby. Be sure your equipment is in good working condition and has been recently serviced.
Prepare
There are many things for you to consider when selling your business and several questions you should ask yourself to help prepare. You will need to delve deep into your business to ensure that you convey all of the correct information to your potential buyer, with evidence to back it up. Some main points that buyers will want to know are:
- Production Rate per day, week, month & year.
- Customer base ratios (residential vs. commercial, single or multi units, etc)
- Backlog – include dollar amounts.
- Equipment records with recent service orders.
- Inventory values and supply.
- Installation details (do you subcontract installation or have an in-house crew?)
- What is your plan after the sale?
Contact an Intermediary
Selling a business is difficult to navigate for first-timers. It is recommended that you involve a professional intermediary, as opposed to the “Do it Yourself” approach. One of the most important reasons to contact an intermediary is that you can find out exactly what your business is worth. Intermediaries are also very skilled in negotiation and will use this to your benefit and ensure you get the maximum price for your business. Another reason is that brokerage firms already have an existing pool of qualified buyers, giving you leverage and hastening the process. Intermediaries work in your favor and help you marketing business confidentially, while you continue to run the business and ensure that everything is ready when a buyer finally makes an offer.
Once you have completed these steps and reached out to a professional intermediary, the process is fairly similar for all industries. The next steps include valuating the business, marketing, buyer prescreening, due diligence and closing. Keep in mind that it is important not to give out any confidential information to a buyer until they have made a serious offer with a deposit and you have met them on several occasions. If you are interested in selling your Granite Countertop Fabrication and Service company, we can help you. We have a qualified pool of buyers consisting of over 25,000 people! We have sold 500 businesses in the Southeast and 5 that are just like yours. Call us today for your free valuation and start planning for your future.