Most business sellers are interested in disposing of their businesses as quickly as possible. But that's not how an insulation removal business sale works.
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If your exit strategy involves selling an insulation removal business in this environment, sellers need to make a strong case for buyers to purchase at or near the asking price.
The shortage in today's marketplace isn't interested buyers -- it's capital. Financial institutions have tightened up their lending policies, making it difficult for inexperienced and undercapitalized entrepreneurs to buy insulation removal businesses. As a result, buyers expect sellers to finance a significant portion of the sale. Although 100% seller financing isn't recommended, sellers are financing up to 70% of the sale price to close deals.
The calculation of your asking price should include a buffer to cover the expense of the sale process. Good brokerage takes a 10% success fee off the top of the final sale price. Professional consultations can also represent a significant expense during the course of an insulation removal business sale. If you need to compensate employees to assist with the sale, their services should also be considered.
Average Preparation Time
Preparing an insulation removal business sale takes time. Since buyers prefer to see evidence of future cash flow, you'll want to to strategically lock in cash flows and increase profits before you list the business. Next, the business will need to be documented in professional financial statements and manuals that facilitate the ownership transition. At a minimum, plan on spending six months preparing your insulation removal business for the marketplace. A more likely scenario is that it will take more than a year to create the conditions necessary to receive the maximum sale price.
Given your interest in exit planning and in insulation removal businesses, you might find these additional resources to be of interest.
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