If you are considering selling a construction business in Charleston, South Carolina, you will want to account for a few important factors. Some apply regardless of your industry or location, but some factors specifically apply to selling a construction company in Charleston. Our decades of experience buying and selling businesses in more than twenty-five industries across the Southeast have helped us identify these three key factors for successfully selling a Charleston construction business:
Factor 1: Elements of a Construction Business Valuation
Whether selling is on the horizon or not, it is essential that you have an accurate accounting of your construction business’s value, but a professional business appraisal is especially important if you want to sell your business. Because the valuation document is arguably the most useful piece of financial information about your company, it requires an experienced, comprehensive approach to ensure accuracy. In order to conduct an accurate business valuation, you will need to provide:
- Past 3 years Federal Tax Returns
- Last 3 years Profit and Loss Statements (P&L), including balance sheets
- Interim Profit and Loss Statement (P&L), including balance sheet and a year-to-date comparison for the same period last year
- Average value of inventory of saleable product on hand at any time of year
- Equipment List
- Copy of tax bill on real estate, if the real estate may be included in the sale
- Copy of any real estate appraisal that is available
- Lease information
Factor 2: Opportunities to Maximize a Construction Business Valuation
As with the business valuation, even if selling is not on the immediate horizon, you are wise to start early in order to take full advantage of these opportunities to maximize the value of your construction business in Charleston.
Build Your Online Presence
The data is clear: your prospective customers are online. Are you? It is critical that your Charleston construction company has a website and also claims all pages on review sites like Yelp and Angi. According to a recent survey, 87% of consumers referred to online reviews for local businesses in 2020. That is up from 81% in 2019 and continues to rise. Claiming pages on review sites — and directing satisfied clients to those pages to leave positive reviews — will build trust in your local market and set your business apart as a trustworthy company in Charleston.
Tend to Equipment Upkeep
To ensure a top sales price, make sure your equipment is in the best condition possible prior to a business valuation; it is a significant portion of your construction company’s worth. We know that it is expensive to maintain equipment, but you will get that money back when the deal closes. Take the time now to ensure your equipment stays on schedule for routine maintenance, that repairs are being completed, and that equipment is replaced when necessary. Remember, if you are still a few years away from selling, this gives you time to spread the maintenance costs over the lifespan of the equipment rather than scrambling later. Equipment value is particularly important in the construction industry, and an impressive inventory will not only increase the sales price of your business but will also attract more buyers.
Empower Your Management Team
When an owner is heavily involved in the details of the business, including operations and client relationships, it can be extremely difficult for a new owner to transition in. This is a high-risk situation for most buyers as they consider the potential fallout from the owner’s exit. This makes having a strong management team a significant boost to the value of a construction business. If you as the owner manage most of the large accounts, since those customers are only familiar with you, it can be problematic for a buyer to step in and take those accounts over or at least keep the same relationship. This is an extremely common issue, and If you recognize this problem within your construction company, do not worry. It can be fixed. The solution is to build your management team or empower the management team you already have. Once that team is established, it is time to begin transferring your responsibilities. Then, when the new owner comes on board, the transition will be much smoother for everyone involved.
Factor 3: Best Timing for Selling a Construction Business
This factor is quite simple: financially speaking, the best time for selling your construction company in Charleston is when it is doing well. We understand that if business is trending up, you may want to wait to see how good it may get, hoping to sell for more and more. Unfortunately, we have seen that way of thinking end in regret for owners who encountered an unforeseen circumstance like a change in their health, the loss of a key client, or an unfortunate turn in the economy or business operations.
The heartache and frustration that comes with this type of situation, especially after years of pouring blood, sweat, and tears into a business, is something we understand well. That is why our confidential, professional business valuation provides essential information that helps indicate the best time to sell a company. As we have all been reminded in the past two years, we cannot see what the future holds. The good news is that businesses that have managed to survive and thrive through the past year are standing out as strong and desirable investments. So, focus on what you can and do know. Financials are the best evidence of where your Charleston construction company is going. Timing is key; you do not want to look back and wish you had acted sooner.
Viking Mergers & Acquisitions can help you understand not only the process of selling a construction business, but specifically of selling a construction business in Charleston. We can help provide a picture of where your business stands today and what may be needed in order to achieve your goals. We are here to help. Contact us today for a no-cost, no-obligation business valuation.
- Selling a Business in Charleston: My Personal Experience
- How long does it take to sell a business? 5 Variables to Consider
- How to Prepare the Sale of Your Charleston-Based Business
1 Murphy, R., December 9, 2020. Local Consumer Review Survey 2020, Bright Local, https://www.brightlocal.com/research/local-consumer-review-survey/