“The most professional group I had worked with” – Steve Hershey, Intown Restorations.
Harvest Business Advisors, Mid-Atlantic business brokers and valuation experts, are pleased to be able to represent InTown Restorations, a long standing Concrete subcontractor in the Virginia, Maryland, and DC Market Area.
Intown Restorations has a 30 year history of working for many general contractors in the Washington DC area. Harvest Business Advisors was able to find a well qualified buyer who is putting resources into the firm and beginning a path of expansion.
Harvest Business Advisors has experience selling construction contractors and subcontractors including HVAC, electrical, plumbing, insulators, engineering and management firms and the like.
Clients choose Harvest Business Advisors for our sage advice on profitably growing their business, accurate business valuations, and when the time is right, a consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at email@example.com or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.
Questions answered in the post: How does Business Valuation for Merger and Acquisition and Business Sale Purposes work? What about business valuation for succession planning and exit strategies? What is the likely sales price of my business? How do I determine an asking price for my business sale?
Want to know more? Please click here for the downloadable e-book. “7 Things You Must Know Before You Order a Business Valuation”
The first question most business owners ask me is “what is the value of my business?” It does not matter if the business is a construction company, a plumbing service company, an engineering firm, manufacturer, business services retail or other. The answer is the same.
In simple terms, the value of the business is the sum of all the benefits that accrue to the owner during and after ownership. Clearly, many of the benefits of owning a business are not income related. Most business owners have a pride of ownership beyond their income and they appreciate the challenges and flexibility that come from owning their own business.
Valuations are done for many reasons: for estate and tax purposes, in divorce settlements, to resolve disputes between partners, to name a few. Sometimes they are needed to prepare for a market sale. Every valuation takes the uncertainty that is part of business into account. There are numerous assumptions that can radically change the final valuation figure or range. Often whether the valuator wants to find a high or a low figure in the range of possible valuations will greatly determine the outcome. This is why divorcing spouses can have such radically varying valuations for the same business.
When you are anticipating selling your business you should obtain a valuation to plan appropriately and, in some cases, to use as a negotiating tool. For smaller businesses your broker should be able to prepare a simple valuation. For larger businesses it is worth having a valuation properly pared by a valuation professional. This person may be independent, work with your accountant or be part of the broker’s firm.
Greg’s Tip: Have both a valuation for business sale purposes and a business analysis (a business improvement strategic plan) performed for the purpose of maximizing your sales value and after tax returns. Ideally this will be performed 3 to 5 years before a sale. While it may seem extravagant, this investment will produce the highest internal rate of return of any investment you make.
Explaining a detailed valuation is beyond the scope of this blog. Technically, a valuation involves either determining that past cash flows fully reflect the future, or projecting out the future cash flows based on past history and likely forecasts, and then discounting this cash flow to find the present value.
Over the next month or so we will add postings giving rules of thumb and other simplified valuation techniques that may assist you in estimating your business value. Just a word of caution, do not go to market based on rules of thumb and estimates. Have a proper valuation done appropriate for your size and type of business.
Connect with Harvest Business Advisors today – email firstname.lastname@example.org or call 443.334.8000
Well managed small electrical contracting business for sale by Baltimore Business Broker. Located in the Baltimore market this company serves local home builders and light commercial general contractors. Trucks, equipment, trained personnel in place. Work in process and contracts will convey. Buying this business would be a great way for a licensed journeyman to get started in business.
To contact us click here to email or call Greg Caruso at 609-664-7955
Harvest Business Advisors
Baltimore Maryland Business Brokers
Business Brokers, Business Valuation, Business Succession Transactions
Gregory R. Caruso, JD, CPA, CVA
Harvest Business Advisors, Maryland Business Brokers are proud to present a 60 year old Mid-Atlantic pool contractor with both residential and commercial clients. The Company is a family owned and operated design/build contractor. It has a reputation for quality, excellence and customer satisfaction. 2013 cash flow was over $200,000.
Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver the highest price in the smoothest sale transaction possible. Harvest provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at email@example.com or 443.334.8000 to discuss selling your business, ordering a business valuation or buying a business.
Benefits for the buyer:
– Design/build library complete with 60 years of history,
– Customer data base,
– Skilled construction teams,
– Skilled sales team,
– Knowledgeable administrative team,
– Robust website and established social media presence,
– Proprietary sales and marketing systems,
– In place operating and sales systems and processes,
– Established showroom and warehouse space,
– A diverse client base in highly desirable markets,
– Industry knowledge and local “branding”,
– Ongoing support from the seller, post transition period,
– Opportunity to cross-sell with existing retail location.
The Company has built pools throughout the Mid-Atlantic region.
Email Ed Davis at firstname.lastname@example.org today
Harvest Business Advisors
Business Brokers, Business Valuations, Transaction Planning
Virginia, Maryland, DC, Pennsylvania, New Jersey
Yes, I am a business broker, I also have 10 years experience owning a home building company and am an JD, CPA, and CVA. This is good stuff when followed.
Every contracting business and engineering firm has profitable and unprofitable customers. If you have not analyzed this, you should. In most cases owners are shocked when they perform this analysis. Take each customer (or product type or market group) and deduct the cost of goods sold to them. Fairly allocate overhead costs either by a simple blanket allocation of all overhead or by breaking out different overhead costs as they apply to different customers.
Considering Selling Your Business? Please click here for a downloadable e-book, “ 10 Ways to Increase the Value of Your Business“.
New Construction Blues
Take a look at this small mechanical contractor’s books. Simplified, they look like this:
Sales Revenue of $5,000,000 broken down as:
New construction $2,000,000
Residential service $500,000
Commercial service $2,500,000
Cost of Goods Sold $2,675,000 broken down as:
New construction $1,500,000
Residential service $175,000
Commercial service $1,000,000
Overhead totaled $2,000,000, broken up as:
Indirect labor (including owner’s salary) $750,000
Other overhead $1,250,000
Total profit $325,000
The simplest analysis to determine profitability is:
Customer Profitability Chart
Sales – COGS – Allocated Overhead = Profit
New Construction $2,000,000 1,500,000 $800,000 -$300,000
Residential Service $500,000 175,000 200,000 125,000
Commercial Service $2,500,000 1,000,000 $1,000,000 500,000
The overhead was allocated based on the percentage of sales of the customer type to total sales.
The next level of analysis might be to allocate indirect labor by the amount of time spent on each customer type. Track or, if you must, estimate payroll allocation to the hours spent direct marketing, supervising, meeting, getting paid etc. With new construction the profitability might decrease more.
As you can clearly see, this business is performing new construction services at a loss. Unless there is a really strong business reason, this business owner should either raise prices for new construction or focus on selling more residential and commercial service. Sales for the sake of sales is ego, (expensive ego) not a valid business reason.
You can make the argument that $100,000 of overhead is paid from new construction projects but that can be equaled with additional sales of under $200,000 of commercial services. Transition to the higher paying customers. The most profitable companies consistently perform this type of analysis and focus on their most profitable customers. Over time this is how exceptional profits are generated.
Greg’s Tip: Improving sustainable cash flow and profitability is the most effective way to increase the value of your business. This is by far the most important factor in determining business value. Sell when profits will be improving right through settlement.
Gregory R. Caruso, JD, CPA, CVA
Harvest Business Advisors
Business Brokers, Business Valuations, Business Transactions