The Real Considerations of Selling Your Company
Now that you understand WHY you want to sell your tree care company and are emotionally ready to move forward, many other considerations come into play. Some of these considerations will be in your control, but some will clearly be the decision of the purchasing company.
Timing of a Buyout
The tree care business is obviously a very seasonal business. Going through a buyout transition in the middle of summer sounds like a certain disaster. In Minnesota, it was very important to handle the transition during winter. It also gives the company a chance to finish the majority of production heading into later fall before the buyout.
Business Valuation
There are obviously several methods to value a company each with their own merits. As owners, we believe there is huge value in the client base and the great evolution of your company. In reality it doesn’t matter. Yes, they are purchasing your client list (and potentially you), but really the purchase is about assets (your employees, vehicles and equipment). Whatever you think the value of your company is, brace for the reality. It will most likely be nowhere near what you think. All of the blood, sweat and tears will only have value to you. Regardless, it will be worthwhile for you to have an outside source provide a company valuation to prepare you.
Structure of Sale
There are a few ways to structure a buyout, but for tree care, it will most likely be an asset purchase.
Key Employees
It is helpful if you or one of your Key Employees is being retained in the purchase. It is possible this employee will need to be included in the contractual language.
Due Diligence
After signing a Confidentiality Contract, it is likely that the purchasing company will want to see private information including key employees, vendors, agreements, liabilities, licenses, internal policies, employee files, financial information including P n L’s. It can be tough to give this information up, but this is the best way to truly evaluate your company. It can be uncomfortable to see your life’s work on a few pieces of paper.
Confidentiality
You may be excited to discuss the possibility of selling your company with key employees, family, friends. A confidentiality agreement will be one of the first things you will need to sign. It is highly advisable NOT to disclose any information unless those persons are involved in the buyout. Often, deals break down and the buyout never happens. It is a good idea to not discuss anything that could jeopardize either company.
If you are comfortable with these items, you are most likely OK moving forward with further negotiation. It does not get any easier at this point. Personally, at this point it became much more difficult. The mythical idea of selling became real and turned into negotiations with people I was not familiar with. Once I was on board with selling, several times someone from the national “merger team” nearly lost me. I found the attitude of the national merger team to be quite dismissive, arrogant and misguided. This process actually made me flip back and forth a few times. Looking back, I was potentially not emotionally ready to have someone tear my company apart.
