How much is my small HVAC biz worth?

[spike]

I've been offered to a chance to sell. Is there an "rule-of-thunb" :eek: formula generally used? Thanks.

[i_got_ideas]

Hire an attourney with experience in this and a great accountant. You can bet the buyer has a team of experts to watch his back, or he should. You can check to see if there is a S.C.O.R.E organisation near you. THey are retired business owner that give some good advice for free.

[raiderfan]

3x to 5x your yearly PROFIT plus your parts, trucks ect. is one that I heard of.

[woowoo]

$42.95
(Only with a coupon)

[mr big]

I have had contractors over the years ask me about selling their business & what was it worth. I usually told them someone would pay them that 3 to 5 times your reported profits. Several would always answer that they had loss money & had no profits & that would translate into a negative number for their business. I would tell them that not to many people are going to buy a business that loses money.

[Roscoe]

What the business has in the way of assets.
Like property, trucks, service contracts etc.
Generally small contracting companies are worth very little to nothing.

ROT
take an average of the net profit for 3 to 5 yr. Add in the property

[cehs]

Just a few thoughts

If they are trying to buy you out, they must want to reduce competition, or expand their own business.

If a company isn't making any profit, they should sell out.

Does the other company know that you want to sell?

Is it REALY that company that wants to buy you out, or is it just a holding company for somebody else????

Know your buyer...

[spike]

Originally posted by pjs
What the business has in the way of assets.
Like property, trucks, service contracts etc.
Generally small contracting companies are worth very little to nothing.

ROT
take an average of the net profit for 3 to 5 yr. Add in the property

Thanks.

I'm not expecting much...

Couple of brothers who operate the most up-and-coming show in the area.

I went to them.

My phone's ringing like crazy, and except for an occasional helper on changeouts, I'm a true one-man show (accounting & everything), and I'm just plain burnt out.

Just finishing up 2nd year. 1 well-stocked '01 van, no real property, about 275 customers, in-the-column YP ad in 3 sections in 2 phone books, decent QB #'s, no maint contracts, profitable from day 1...

Biz has reached the point of mandatory expansion, IMO. In the summertime. MS is the lowest per capita income state, with a corresponding level of professionalism in virtually all the trades, on the worker level. OTW, good help is really hard/impossible to find (just like everywhere else). Right now I have 100% quality control, if you know what I mean. I got some health issues going on right now, and I need to reduce reduce my stress, not add to it by expanding. Tired of wearing all the hats.

The customers are the debatable issue, to me. What are they really worth and whose to say they'll do business with the new people?

[Edited by spike on 06-02-2004 at 09:01 AM]

[Green Mountain]

Originally posted by spike
I've been offered to a chance to sell.

"You lucky bas.....!!!" I'm stuck with this old dog and I don't know what to do with it.

[maintenanceguy]

Should owner's salary be included in the profit figure?

[Diceman]

You are making a big mistalke, ask Todd, I told him the same thing.

[Roscoe]

Thanks.

I'm not expecting much...


The customers are the debatable issue, to me. What are they really worth and whose to say they'll do business with the new people?

[Edited by spike on 06-02-2004 at 09:01 AM] [/B][/QUOTE]

Spike
The customers are not worth anything unless you are part of the package or they are service contract customers

If you co. is progressing that good you may want to hang in there for a few more years. Sell service contracts build the business a little more, aquire some property. These things have value and when you do sell your company will look much better on paper. Some companies look for small profitable outfits to buy up for the assets, the service contract customer base and the employees. You would have to work for them and sign a noncompete clause. This could be what you are looking for, you get to run your company within their company.

[Roscoe]

Originally posted by maintenanceguy
Should owner's salary be included in the profit figure?

[heat411]

raise your prices, make more work less , enjoy more be happy

[absrbrtek]

The people I know that have sold recieved one yrs gross sales. That was determined by averaging the last 3 years of gross sales. Take it in cash, no stocks or other types of payment that could go down in value. They may ask you to stay to help with the transition at a good premium.

[xpertser]

Originally posted by absrbrtek
The people I know that have sold recieved one yrs gross sales. That was determined by averaging the last 3 years of gross sales. Take it in cash, no stocks or other types of payment that could go down in value. They may ask you to stay to help with the transition at a good premium.


At that price mine is on the market starting now.

[nehps]

Iam the same, just like you said an occasional helper, a few friends that do some changeouts. You said 2-years, Ive been at it for about 10-years, I do it all, I have an answering service use Nextel, they text all my phone calls over, I have about, I know its over a 1,000 regular customers. Ive been burnt out for the last 5 years, just worked for the 4th. year in a row Memorial Day weekend, Sat. Sun. Mon. left the house 6:00am.-8:30pm. all three days same hrs. last year same place, commericial building rest. stores, hair dresser etc. replacing a/h, and hp. Yesterday 10hrs. today 6hrs. Believe me Iam burnt, Iam going to give up my commercial accounts had enough of this. As long as your by yourself its the way it will always be. When 2006, rolls around and we have to replace a/h with condenser, were going to be screwed, unless you get a good tin knocker. Also you said profitable, you can only make so much, spreading yourself to thin. I thought being alone a$100,000 was alot, but if I break it down, betwen the phone calls, service calls, installs, looking at jobs, paper work, working on my own van, propopsals and everything else, out of $100,000 in a year probably make $25/hr. My cousin is an auto mechanic he now has 3-guys working for him, he always said "Stay small, and keep it all" Expenses are going thru the roof, insurances, advertising, etc. My Blue Cross just went up $100 more a month, starting July, its getting hard to make $$$. GoodLuck.

[midhvac]

Originally posted by heat411
raise your prices, make more work less , enjoy more be happy

Spike, this is good advice. You'll be miserable if you sell.

I've seen others in your situation who weren't charging enough, and it really overstressed them and burned them out too quickly.

What the other company will give you is chicken feed compared to what you're giving up.

Raise the prices, and slow down. Take a little time to smell the roses.

[spike]

heh- I'm miserable now (god bless america, right?)

hey thanks everyone.

nehps - you are the f'n man! I'm not worthy to be in your presence...:D

What it really boils down to is this:

I'm simply not having fun any more doing what I'm doing in the HVAC industry.

At 1st it was all fun, but now being the tech, the salesman, the accountant, the owner, the installer, the friggin excuse maker ("I'm sorry mee-maw, even though you've been a great customer for the past 5 years, I am slap booked solid for the next 2 days")... SUCKS!

We won't even talk about our 2 rental properties, my honey-do list, or attempting to be a dad to a 1 year old and a 2.5 year old...

I feel like I'm being pulled in 6 different directions, 24/7...

My prices (I feel) are pretty darn high, and my OH is darn low. (I'm running almost a 50% PM)

I've cut my YP ad from a display down to a 1" in the column, and when you call me, the 1st the the phone says is "Our hours are 8 - 4:30 M-F".... I simply don't care if you're broke after that or on the w/e...

It's gotten to where is just don't give a f about going up in some nasty AH that hasn't seen the light of day in 20 years , ya know?

Half the time I dont turn on the phone 'cause I don't want to hear that 'beep' that says I have a voice mail...

Truly, though, the overriding thing is my health. Last months MRI results inteprets the 3 migraines with aura I've had over the past 4 years were so severe they caused microvascular damage or something to that effect. I have a permenant headache now (about a 3 on a 1-10 scale). When my body temp rises (attics, sunlight :eek:, etc - go figger...), those #3 headaches crank waaay up to about a 8 or 9 and nothing and I mean nothing phases them even slightly.

So. I've T/S this thing down to this. To stay alive and not have a stroke - stay out of the heat, reduce my stress level, keep the money the same or better and start having fun again. Simple. I'll let you know.

[Edited by spike on 06-08-2004 at 12:37 AM]

[i_got_ideas]

I do know what you mean.

When you get burnt out you just don't even want to get out of bed in the morning. My father started me in construction when I was 12 and I was a finger banger for 10 years including owning my own afterhours construction company. I finally just got tired of pounding nails, needed more. I just laid in bed in the morning a dreaded going to work. I also was going to a chiropractor 2 times a week just so I could stand up. I love owning a business, I learned that and now I have found that I love HVAC, it's not even like going to work, more like going out to play, and no more chiropractor either. I personally can't wait to be owner some day soon but I do know what you are feeling.

Good luck in whatever you decide.

[hvacmd2002]

I know exactly how you feel. I'm a one man show with an occaisonal helper. I've been at it for 12 years now. The money is great though, and the thought of working for someone else makes me sick. If it ever comes to that point where I can't take it anymore, I'm gonna go work at Home Depot or something. No more call.

But right now, the sound of my pager makes me sick. I've learned to just do what I can, and don't take many new accounts. If it's a good account, I'll take them at a premium rate. No more fighting with the foreigners. If they don't like my price, I walk out the door. Much less stress that way. I've raised the rates on my current accounts, and will be going up again this month.

I spoke with a market guy the other day, and he's getting royally screwed by the chain, so going back into markets is definitely out of the question. So, I'll do what I can, as long as I can. I've also hired help, and put another truck on, and that REALLY sucks. The truck is gone and so is the help.

[James 3528]

It boils down to what you someone will pay you.

[JMP]

Originally posted by James 3528
It boils down to what you someone will pay you.

I would not go to work for anyone no matter what pay. FREEDOM to say no, to take off when you want, to give the orders, to do things YOUR way, etc. Everyone is different I guess.

[heat411]

being in business is like catch22 or a double edge sword. i have been doing this 24 years but only recently has the stress increased because of missing numerous events for the kids.Hire a couple more people and ,raise prices, its worked for me.Wearing all the hats isnt worth it, no matter how much we make if we end up sick or deaddddddd!

[Diceman]

You don't have to save the world all by yourself.
Do what you can and the others will find someone else.

[Dowadudda]

There must be a flu going around in the industry. Some kinda like bird flu with special strain to afflict small one or few man bands.

I get that way a lot. But it fades.

[go4it]

Biz itself is not worth much with out a good rep.

[SeattlePioneer]

<<If you co. is progressing that good you may want to hang in there for a few more years. Sell service contracts build the business a little more, aquire some property. These things have value and when you do sell your company will look much better on paper. >>


I disagree. Getting OUT of a business is usually harder than getting into one. Adding equipment and employees in order to sell out is ridiculous, in my opinion.


In my view, the situation described with a one man shop should be glad to sell out for the real value of parts, equipment and inventory. It's unlikely you could expect to get much of a premium.

The person writing describes himself as burned out. I can understand that, but it argues for restructuring the business to meet your real desires, rather than selling out altogether. I have cut back on my sales and work by cutting advertizing and the territory to which I will travel. My business aim now is to do only the work I am HAPPY to do.

That makes a big difference. It might be worth considering if you'd like to milk some additional income out of your business.



Seattle Pioneer

[Tempted]

My new business is priceless, unless your retiring me. 5 months into it, 1 new part time helper and hopefully a full journeyman on the way.

I don't have an "S" on my shirt nor can I fly. So I'll take the advice of the majority here and share the responsibility and $$.

If I need to fly, I'll take a plane

[R12rules]

If your in that much pain, you need to make some immediate and serious changes!

My dear wife is a nurse. When she gets a headache or something like that, I get all the details on how it affects her.

I have never been prone to headaches myself, so I cant relate to how you feel.
I have had other issues, medically, to deal with. But they have more or less passed and never anything like a number eight on the rickter scale of headaches!

You probably need to raise your rates, seek a second to take part of your load and get some quality time with your family.



My wife's a "Steel Magnolia". If she was anything less, she would be flat in bed whenever something like that came over her.

I am surprised to hear your still upright!

If I had headaches like that, I'd have to have a straight jacket put on me for th safety of those around me.
I'd be a madman.

With a number eight headache, I'd be so miserable and agitated that I'd make a drunk James blush. And THAT would really take somethig awfully horrendous!

And I would NOT be proud of it either.

[Dowadudda]

I myself have a weird veiw of this. I can see where a big dog mechanical contractor is bought. Where they are doing 20 mill a year and have legal binding lucrative contracts, but the average little 5 and dime company. I just don't get it. Sure you got the assets like your vans and property and all that jazz. "AT FAIR MARKET VALUE", as my accountant uses that term in every other sentence to me.

but Most shops follow zero finanicials. Most shops are born out of the owners "culture" and does not fit any one other person. I guess for my taste and my speed, I could not buy another company when I know damn well I could start and run my own for much less in initial captial.

This is a business about selling two things. Your talents one, but most importantly you sell yourself. And the "self" ends up hiring guys that fit him and his ideas on life. I know half my good customers kids names and birthdays. Sure I do good numbers. Yeagh I got me a nice gig here. But is it worth anything to anyone else. I guess in my opinion, no, not really.

[selfemployed]

I have perused this for 2 yrs. and no luck. Either they don't think its worth anything (with or without me) or don't like customer list (several resturant)and residental accounts. The one thing I can honestly say is they don't want me or the way I am. It's all about money and thats not where I'm comming from and they know it. They know I won't go away (quit)too. Everybody burns out sometime but you have to find a way to recover, there is not another option. So whatever works for you is what you do. Loosing a couple of your PITA customers can work wonders. But hell I work by my self 99% of the time so what I know about running a big Co. you can put in a thimble.