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We are sometimes asked, “What’s a great type of business to buy?”

 

One industry attracting a lot of interest from individual and Private Equity buyers is the HVAC (Heating/Ventilation/Air Conditioning) industry.

It makes perfect sense. This is an industry that has been largely unaffected by COVID-19. Someone looking to buy a business during this time – whether it’s a business in MA, RI, or NH – would do well to consider buying an HVAC business. Analytics has shown an increase of search terms such as “sell HVAC business” and this indicates it is also a great time for selling an HVAC business.

HVAC is an essential business. When people need an air conditioner installed or fixed because it’s hot outside, they call an HVAC company. Similarly, when the weather is cold and their heating system is having problems, it’s HVAC to the rescue. It’s not a decision the customer can put off.

It’s a largely recession-proof (and COVID-proof) business.

The companies within that industry which are in most demand are the ones whose model is to provide ongoing service and services contracts for an existing customer base, as opposed to those whose business comes from new construction installation. The difference can be seen in these two examples. An HVAC business which had annual sales of $12 million but earned its revenue almost exclusively in one-time, new construction work sold for $2 million on the market. And, a second HVAC business with annual revenues of between $4 and $5 million, and which draws most of its business from ongoing service for its customers, also sold for $2 million. HVAC Service businesses are in much higher demand and also sell much more quickly.

If you are looking to buy an HVAC company in RI, or to buy an HVAC business in MA, one question you will want to ask is where does the bulk of their revenue come from. The ideal mixture can be some new construction but a larger amount of repeat service business. This holds true for residential and commercial HVAC service providers.

And if you are the owner of an HVAC company and you are looking to sell an HVAC company in MA, NH, RI, or elsewhere, in addition to the individual buyers who may be out there in the marketplace, there are a number of private equity groups, larger companies and family offices looking for companies who have fared well during COVID. Don’t get lose valuable time searching general terms like “sell HVAC business”.

The HVAC model has stayed relatively stable even during these unusual times. As a result, buyers who may see fewer options on the market may take a stronger, more serious look at HVAC. Sellers will see strong multiples in the purchase price. Additionally, interest rates remain low, which is good news for both buyers and sellers in this market when it comes to financing.

If we can assist you in any way, please give us a call!

Contact Gary Rayberg at grayberg@roibusinessbrokers.com  or at 781 -682-6209. Ext 208.

ROI Corporation has sold 23 HVAC companies in NH, MA and RI over the last few years and is a leading authority on improving the value of HVAC companies prior to sale. ROI uses an exclusive marketing process to obtain the highest value for the seller of an HVAC company. Take the search on how to “Sell HVAC Business” to the next step, we’re here when you’re ready.

About ROI Corporation

ROI Corporation, based in the Boston market, has been involved in the sale of businesses and real estate in over 30 states since 1997. They also assist in the transfer of business ownership between generations and to key employees and management teams. ROI serves all of New England including MA, NH, RI, ME and CT with two divisions; a main street division serving smaller businesses as well as their middle market M&A division. Their Marietta, Georgia office, specializing in Service Distribution & Manufacturing Companies, serves the southeast United States. For more information, please visit us on the web at www.roimergers.com or call (781) 682-6209.

 

By; Gary Rayberg, President ROI Corporation.

When faced with uncertainty, the human brain is conditioned to run through a gambit of worst-case scenarios. This is especially true when it comes to the case of announcing your intention to sell your business to your employees and staff. How do you do it without losing key employees and affecting not only the value of your company but your sale as well?

Gary Rayberg, president of ROI Corporation has seen several deals stall out or get delayed due to unclear terms and paths of actions. He has been involved in the sale of businesses and real estate  in 39 states, through two recessions and focusses in Massachusetts, New Hampshire and Rhode Island. He has seen countless transactions, acquisitions and mergers. Let’s break down two of the ways to handle telling key employees… 

One way to handle this is not to say anything to your key employees.  Confidentiality is king!  Sellers will do this because they are concerned, and sometimes rightly so, that the key employees will panic and leave.  The upside to saying nothing is that you do not create worry among the key employees. The downside is that, in the end , the buyer will identify the key employees and most likely make the purchase contingent on employee contracts with the key folks.   We set that meeting between buyer and key employee (s) up just before closing. We want everything else to be settled so that the only barrier to closing is a contract with the key employee (s). That way once the employee agrees, the closing can happen immediately.  I have many client stories on this but can best relay my own story. I sold an employee relocation service provider that I owned to an international buyer in 2005.  All the due diligence was complete except for an employment agreement with my General Manager.  Her name was Lillian and she was the best employee and manager I could ask for. I waited a week while Lillian and the buyer negotiated a deal. One of the toughest weeks in my business life. Would she agree?  Would she quit and cause the sale to not go through? Would she ask for so much money that the buyer would back out? Luckily none of those things happened to me, but they can happen. About 75% of sellers follow this “wait to the end” route with key employees. Rest assured it will eventually be an issue in most cases before closing a sale.

The second way to approach this issue is to have an open and frank conversation at the beginning of the sales process with your key employee(s).   Ask them to sign a non disclosure agreement and then explain your intention behind the sale and reassure their best interests are a priority, however, leave out details such as sale price and key terms. And then… Incentivize. Most key employees leave due to worries about their financial future under the new owner. Since you will most likely need their cooperation during the sale to fill in the new owner on the day to day operations, many sellers will build in a stay bonus program. Usually these bonuses are timed to pay out after 6 months to year of employment under the new owner. I have even see plans that pay at 6 months, one year and again at two years.  If termination happens before the time has passed another amount can be agreed upon. The plan can be tailored to the situation.  This accomplishes two things. First the employee can become part of the sales team. Making sure their responsibilities are adding to the bottom line to make the business (and them) more saleable to a buyer. This Key Employee also has a stronger feeling of job security. If they are being paid to stay, they must not be losing their job.

To decide which is the right transition plan for your key employees, first identify who the key employees are likely to be in the eyes of a buyer . A business broker can review your company and help you understand who a buyer will most likely have on the “must have” list.   Usually 1 to 3 folks depending on the size of your organization.  Next take stock of the key employees personality?  Can they handle knowing upfront or will they freak out and quit?  You will have to make that decision based on the time you have worked together. There is no 100% always right answer. Just be aware that one way or the other , you will most likely need to deal with the key employee issue before closing the sale.

Have questions about selling a business or transferring ownership to a key employee or family member? We can help! Contact Gary Rayberg at grayberg@roibusinessbrokers.com  or at 781 -682-6209. Ext 208.

About ROI Corporation

ROI Corporation, based in the Boston market, has been involved in the sale of businesses and real estate in over 30 states since 1997. They also assist in the transfer of business ownership between generations and to key employees and management teams. ROI serves all of New England including MA, NH, RI, ME and CT with two divisions; a main street division serving smaller businesses as well as their middle market M&A division. Their Marietta, Georgia office, specializing in Service Distribution & Manufacturing Companies, serves the southeast United States. For more information, please visit us on the web at www.roimergers.com or call (781) 682-6209.

By; Gary Rayberg, President ROI Corporation. www.roimergers.com

20 plus years of selling businesses and real estate ranging from 1-10 million dollars in value, through two recessions and across states such as MA, NH and RI (39 states in total) has taught me invaluable lessons such as TIMING. Is this the right time? My answer is “It just might be!”

Here’s why…

Only 11% of small businesses have not been affected by the pandemic in the US. In fact, many businesses are doing better. I had a conversation recently with a retailer of Spas (think Hot Tubs). May 2020 was the best month in the history of the company and the staff was selling from home!  So, the news is certainly not all bad.

This is true for businesses such as HVAC, plumbing service companies, many manufacturers, auto body shops, any office services provider that make it easier to work from home, online education providers etc. Add to this list, stay-at-home or vacation-at-home businesses such as the Spa retailer mentioned above. Or, the marina we have listed for sale where we are getting multiple offers. So, in short, if you have a business that is relatively unaffected, or whose sales are increasing, it’s ALWAYS good time to sell your business and it is still a seller’s market.

What if your business is being hurt by the current situation?

While Restaurants and those that supply them will most likely need a longer time to recover, many other businesses will still be in demand. Let’s look at some numbers…

According to Barlow Research Associates, the average small business owner in the US is 60 years old. 40% of business owners are 65 plus. This means an owner has to decide if they want to put the years that may be required into rebuilding through this recession or… sell at a reasonable price today.

It is true that according to the Q1 Market Pulse Report Published by The International Business Brokers Association, M&A Source (the leading trade organizations for M&A Business Intermediaries), 81% of business intermediaries surveyed felt that values will contract some. Typically, in my experience, these values will still be within a 10% range.

While waiting and rebuilding might yield a greater value in the future, the question to ask is, “do I actually want to do this for another economic cycle, or is this the time to move on with my life?”  The answer is a deeply personal one, of course.  The good news is that if the time is right to sell, there are still plenty of well-funded buyers and buying groups to compete for your business!  Remember the process often takes up to a year and you may be asked to stay on for a period of 3 months to 5 years after a sale, so factor that into your retirement timeline.

An opinion of value is like the “you are here” mark on a map. It is hard to know what direction to move in until you know where you are. An opinion of value will tell you that about your business today.

If you want to understand the value of your business and what effect the current situation has had on it, contact ROI Corporation or another business intermediary for an opinion of value and other recommendations.

 

About ROI Corporation

ROI Corporation, based in the Boston market, has been involved in the sale of businesses and real estate in over 30 states since 1997. They also assist in the transfer of business ownership between generations and to key employees and management teams. ROI serves all of New England including MA, NH, RI, ME and CT with two divisions; a main street division serving smaller businesses as well as their middle market M&A division.  Their Marietta, Georgia office, specializing in Service Distribution & Manufacturing Companies, serves the southeast United States. For more information, please visit us on the web at www.roimergers.com or call (781) 682-6209.

COVID-19 has altered the business landscape in Massachusetts, New Hampshire, Rhode Island and beyond. For many people contemplating the sale – or purchase – of a business, they may be wondering how a disease that arrived on our doorstep just a few short months ago could cause so much havoc.

 

And for the baby boomers who are considering retirement, the question they may be asking is, “Given everything that is going on, how do I sell my business in MA?” Or “How do I sell my business in NH?” “Has COVID-19 changed my options?”

There are still many opportunities when it comes to the purchase and sale of businesses, and we believe conditions will get even stronger. Yes, COVID has changed the landscape, but people are adaptable. Commerce will continue, and people will continue to buy and sell businesses.

For the business owner thinking about selling,  the first question is often “Do I try it on my own?” or “Should I use a business broker?”

Just as many people who think about selling their homes opt to use a realtor rather than “go it alone,” many business owners would value the services of a professional business brokerage to help assure that they are getting full and fair value, and at terms that the seller finds favorable.

In our ongoing blogs, we will offer suggestions and tips on how to get yourself and your business ready for sale. Whether you want to sell an HVAC business, a dental practice, a manufacturing operation, or a business that provides services for other businesses, the first few steps form the foundation of any eventual sale.

In fact, it’s a question we get asked frequently. “What are the steps I can take to make sure my business is ready for sale?”

The first step sounds very simple: know where you are today. Think of it in these terms: if you are lost in the woods and trying to find a road, you first need to where you are on the map (whether that’s an old fashioned printed map or something on your iPhone app).

And for the business owner, “knowing where you are today” means having a reputable opinion of the value of your business, and also knowing what risks and factors might affect that value.

There is an old saying that a business is worth what an owner is willing to sell it for and a buyer is willing to pay. But there’s a lot of room between those two points that gets filled in by data.

Begin with a business valuation expert. Someone knowledgeable and experienced in business valuation will look at the numbers, the sales, the expenses, and from that provide you with a range of what the business should sell for. Sometimes your CPA firm can deliver this information; at other times you may seek the opinion of a valuation expert.

These are some of the questions your valuation expert may ask:

• Do you have solid, accurate monthly financial P&Ls and balance sheets?
• Is your business spread out over a large number of clients, or are there two or three who represent a disproportionately large sector of your business?
• What is your source of revenue? Does your business have recurring income each month or do you need to go out each day and find new business?
• Does the team stay with the company? Are there employment agreements in place that will assure the new owner that he/she will have a seasoned team in place?
• Is the company up to speed with the latest technology?

If you are starting to think about selling a business, there are a number of steps you can take to boost the value of the company you hope to sell, before you go to market. This is where a business brokerage can prove invaluable! Having arranged for the sale and purchase of hundreds of businesses, we can provide guidance on steps you can take to make your business more appealing and more valuable. Give us a call or email us for a no-obligation conversation today.

To our valued clients, customers and associates:

During the current health crisis we want to assure you that we are taking the steps
as defined in our Business Interruption Contingency Plan. We remain fully
operational while we are all working from home as per the social distancing
recommendations. We are still here to provide all our services but will set meetings,
whenever possible, by phone or video conference. Below you’ll find some of our
clients questions answered and what ROI is doing to help our community.

 

What if you are selling your business, or were considering it?

We are being told by SBA backed banks that we can expect money to be available
for purchases and that if the business financial performance is affected by the virus,
it will be viewed as to where the business was before the outbreak and how it
performs after. In other words, common sense will prevail in how this bump in the
road is viewed.

 

What if you were looking to buy a business?

SBA banks are lending and you will have to evaluate the long term effects of the
outbreak as you analyze a particular business opportunity. However it is the mission
of the Small Business Administration since 1953 to assist in small businesses in
starting, growing, expanding or to recover. For more information, please visit their
website here.

 

How has it impacted the market?

There are still multiple private equity groups and individual buyers reaching out to us
for opportunities every day. The market appears to be strong even if folks are
approaching deals with a little more caution. This is a changing landscape and we
will do our best in our announcements and individual consultations to provide
current information as we become aware of it.

 

What if you just want to talk about your options?

In the spirit of community outreach, at this time, we are offering free consultations
regarding any and all questions you may have regarding your options and current
state of your business. We know these are worrying times and we’re here to provide
some peace of mind. We will get through this together. If you’d like to talk, please
call or email. We will also be offering free advice through several of our social media
channels, keep an eye on our Facebook, LinkedIn and website blog.

 

In the meantime, please stay safe and be well.

 

Sincerely,

Gary Rayberg, CBI, M&AMI

President

ROI Corporation

Press Release ROI Corporation

ROI Corporation is proud to announce the Medical Division’s Vice President Lyn Triffletti’s recent appointment to Beth Israel Deaconess Medical Center’s Leadership Board and Foundation Committee. Ms. Triffletti was nominated by BIDMC Trustee Advisory Board member emeritus, Harold Solomon, MD. Dr. Solomon and Ms. Triffletti worked together at Harvard University where they provided education to graduate residents on the business and revenue aspects of medical practice.

Lyn Triffletti is no stranger to prestigious titles. She was previously VP of Regulatory Affairs at a major Boston hospital, and has been a corporate compliance officer for several physician groups, as well as for a 4500-employee private firm in southeastern Massachusetts. She has worked extensively with health care attorneys in Massachusetts, Rhode Island, Connecticut and New York. Ms. Triffletti served as CEO of the innovative Physician Chart Auditors (PCA) for over 15 years and in 2013, in conjunction with Lauren Hartigan, founded Scribe Partners.

Scribe Partners fulfills a growing need in the medical marketplace to help physicians complete their notes accurately in the electronic medical record (EMR) on time and cost-efficiently. Physicians are partnered with a qualified graduate of Scribe Partners proprietary training program. Scribes help medical facilities stay ahead of the curve in this regard, as scribes free physicians from time-consuming documentation responsibilities.

She continues to impart her brilliance in the healthcare business field as Vice President of ROI Corporation’s rapidly growing Medical Division. She brings more than 30 years of experience and assists in helping those seeking to sell their medical business through valuations and helping match them with interested and qualified buyers.

About ROI Corporation

ROI Corporation, based in the Boston market, has been involved in the sale of businesses and real estate in over 30 states since 1997. They also assist in the transfer of business ownership between generations and to key employees and management teams. ROI serves all of New England including MA, NH, RI and CT with two divisions; a main street division serving smaller businesses as well as their middle market M&A division. Their Marietta, Georgia, office, specializing in Service Distribution & Manufacturing Companies, serves the southeast United States. They also have an office in Simsbury, Connecticut. For more information, please visit us on the web at www.ROIbusinessbrokers.com or call (781) 682-6209.

Better positioning your business is always tough, entrepreneurs like yourself are constantly working on their business in the day to day sense. What lies ahead for you in the next year? In the next three years? Even if you’re not planning on selling your business soon, these two tips combined can increase the value of your business, streamline your process and increase revenue.  

 

TIP 1: CLIENT/CUSTOMER CONCENTRATION – We all love our biggest clients, frankly they help pay the bills. However, as a business owner you should scrutinize these clients if they represent 15% or more of the business’ revenue. Why is that you may wonder? A business buyer will look at a large customer concentration of over 15% of gross sales as a risk to the business and a discount to the value. How long would it take your company to recover business lost if one or two of these larger clients should ever leave? In order to decrease the risk for you the current owner, we highly recommend reducing the percentage by two ways. Bring in more clients and start reducing the amount of work the larger clients/customers are receiving. This will not only make maintaining profitability easier, it increases the value of your company while also decreasing your risk. Bottom line: You don’t want to give up the large clients, you simply have to diversify.

 

TIP 2: JUNIOR MANAGEMENT PLACEMENT – Is everyone in your senior management team near retirement? It might be an awkward conversation to have or plan for but it is absolutely necessary to secure the future of your business. When it comes down to selling a business, a business buyer will look at your Senior Management and must consider the risk of replacing them if they’re near or at retirement age. Your staff has invaluable experience in the industry and that knowledge should have longevity past their time with your company. Hiring junior representatives who are ready to take over when the times comes ensures that the momentum of your business is uninterrupted. In today’s world where boomers are aging out of businesses and jobs one of the biggest issues ROI has encountered is the worry of who will carry the expertise once the current person is gone?

 

An example for further context and for privacy we won’t mention the industry. ROI’s consulted with a company that had a customer concentration of 35%. The owner had his hand in everything and there wasn’t a management team at all. Great for the owner and his business until it came to retirement.  What does one do with their life’s work when you’re ready to move on? They turned to ROI and our President Gary Rayberg. ROI’s valuation of the business was $1.9 million and the owner (for various reasons) decided not to sell at the moment. They did however heed the advice ROI had given, the company made steps to reduce the customer concentration and hire one person to learn the management role. Two years later they returned to ROI having reduced the customer concentration to 18% and hired a management apprentice. The company valuation increased to $2.4 million with the changes. Reducing risk increases stability and affects value positively, don’t let the short term expense scare you away from long term thinking. Don’t know where to start? ROI can help.

ROI Corporation specializes in the steps before you even consider selling your business. Consultations and Valuations would be the first step into increasing the value of your business and also setting you up on the right track for the year. Call today to speak with someone about how to increase the value of your business, reduce your risk and create long lasting stability.

For more information, click to watch a quick video seminar on increasing the value of your business:  Free Video Seminar