I'm considering selling my HVAC service company in Houston. We do about $1.2M in revenue with decent margins. How fast are service companies selling in this market? I've heard everything from 3 months to over a year. Would appreciate any real-world insights.
Business Sales
How fast are service companies selling if I sell my business in Houston?
Depends on the size and how clean your books are. HVAC is hot in Houston though so probably on the faster side. But I've seen deals drag out for 8 months over due diligence issues.
What's your EBITDA? Buyers care more about that than revenue. If you're above $300k, you'll get attention.
EBITDA is around $250k. We've been growing steadily. Does that change the timeline?
250k is a bit small for private equity but still attractive to individual buyers. Those deals can close in 4-6 months if financing is smooth. But SBA loans are slow right now.
I sold a plumbing company in Houston last year. Took 7 months from listing to close. The first offer came in 6 weeks, but due diligence was a mess.
What did you do to prepare? I'm thinking about selling mine in a year or two.
Mainly cleaned up financials and got a proper valuation. Also had to show customer retention rates. Buyers asked a lot about recurring contracts.
Recurring revenue is key for service businesses. If you have maintenance agreements, highlight them. That can speed things up because buyers see stability.
We have about 40% of revenue from maintenance contracts. Good to know that's a plus.
40% is solid. You should be able to sell faster than average. But dont expect a premium unless you have a strong management team in place. Buyers want to know the business can run without you.
Does having a manager in place really make that that much difference? I'm the only one running things right now.
It does. Buyers will discount heavily if the owner is the business. They might still buy, but it adds time and negotiation.
And expwct to sign a non-compete and stay on for a transition period. That can extend the process if you're not ready to commit.