Construction businesses are harder to sell than most, and the reasons are usually fixable given time.
Buyers look hard at the contract book, retentions, work in progress and how much of the business depends on the owner’s relationships. Where those are messy, the offer reflects it.
Here is what to put right before you go to market.
1. Assessing business value
Your very first task should be to value your business. Doing this well in advance presents you with opportunities to improve its value before you officially place your enterprise on the market.
To work out the genuine value of your business, there are several factors to consider.
- Your financial performance – carefully evaluate the previous 3-5 years of your financial statements to assess the company’s financial health.
- Assets and liabilities – it’s important to be upfront about your assets and liabilities and make sure they are all carefully documented.
- Market position – your company’s market footing will have a strong bearing on its value. This means determining what share of the market your business holds, the size of your client base, and your company’s reputation.
The actual work of valuing your business can be done by a specialist accountant or it can be done by a business broker.
2. Organise your finances
Prospective buyers will be keenly interested in your financial stability and prospects for the future. As a result, you’ll need to prepare an abundance of financial statements, as we mentioned above, and make sure they are all accurate and up to date.
This includes ensuring your tax obligations have all been fulfilled. If you do have any outstanding tax issues to deal with, you should hire a tax advisor to help you resolve them in good time.
As well as displaying your finances for the past few years, you’ll also need to provide a financial snapshot of the future. This means preparing realistic forecasts for the next few years, so buyers can see your company’s growth potential for themselves.
3. Legal and Compliance checks
Being able to prove that your company meets all the necessary legal and compliance criteria is vital.
This means being able to provide documented evidence of your company’s compliance. That includes verifying that you have all the required permits and licenses; that all your contracts are up to date and transferable; and that you have complied with health and safety regulations.
If you do have any issues – whether it’s a dispute with an employee, or accidents that happened at your workplace – you need to be transparent about how you plan to resolve these problems.
Always keep in mind that failing to be open and honest will not stand you in good stead with would-be acquirers!
4. Modify your business operations
To increase the likelihood of boosting your company’s value when you sell, you should scrutinise your operations. Perhaps there are steps you can take to improve the business’s performance and become more efficient.
For instance, you could find ways to:
- Streamline your operations
Pore over every aspect of your business and try and pinpoint any potential areas for improvement that could make the company more attractive to acquirers. Maybe there are some new technologies you could adopt, or upskilling methods you could use to improve your employees’ productivity. Maybe there are some strategies you can employ to cut costs or reduce project waiting times for customers.
- Strengthen client relationships
Every business stands or falls according to the size and loyalty of its customer base. Consequently, the importance of positive client relationships really can’t be overstated, especially if your business is still relatively small and trying to gain a firmer market foothold.
To help you build these strong relationships, focus on how you communicate with your clients and the steps you can take to ensure their construction projects proceed as smoothly as possible.
- Boost employee engagement
While many construction businesses rely on teams of agency workers and sub-contractors, you will most likely also have a core team in place, not only on sites but at your headquarters. Building a reliable and motivated team is a vital element of success, whether you work in construction or not. Analyse your employees’ current levels of engagement and see what can be done to improve them pre-sale.
For example, perhaps there is more training you could offer, or more one-on-one meetings to help staff meet their own professional goals. Perhaps you could introduce more flexitime into your contracts or offer higher wages.
Whatever your business can comfortably do to improve your team’s productivity and morale before a sale is bound to contribute to a rise in your company’s value.
5. Why not hire a business broker?
Managing a construction company is surely no small task, and preparing one for sale is also a weighty undertaking.
To remove a lot of the hard work and stress from your already laden shoulders, why not place primary responsibility for your sale in the hands of a capable business broker? Tried-and-trusted business brokers in the UK – like our team right here at Harris Acquire! – have a wealth of experience in selling businesses of all shapes and sizes.
Not only will a broker be able to value your business for you, but they can also take over every stage of the M&A process. This includes sourcing and verifying potential buyers, creating bespoke marketing materials, ensuring confidentiality, and assisting with negotiations.
Summing up
In conclusion, preparing to sell your UK construction business requires a lot of careful analysis, methodical planning and a healthy dash of communication with all concerned.
With the aid of the tips and strategies detailed above, you can boost the value of your business. Not only that, but you can also make sure the transition to new ownership is as smooth as can be.
Keep in mind that the selling process can take several months, and your preparations to sell can begin a year beforehand. Taking the time to thoroughly prepare your business to be sold should reap dividends when it comes to the eventual purchase price and the success of the deal.
If you’d like help with selling your construction business in the UK, why not give our friendly and highly experienced team a call on 01926 57100? Alternatively, you can send a message to Hello@harrisacquire.com and we’ll be in touch right away to explain how we can help you find the perfect buyer.
