Preparing Your Construction or Trades Business for Sale
Selling a construction or trades-based business is a significant milestone that requires careful preparation to maximize its value and ensure a smooth transition. Here are key steps to get your business sale-ready:
Engage a Business Broker Early
Working with a business broker—particularly one experienced in the construction or trades industry—can provide valuable guidance from the outset. They can help assess your business’s value, identify potential buyers, and ensure all necessary documentation is in order.
Reduce Owner Dependence
One of the biggest hurdles in selling a trades business is its reliance on the owner. Before listing your business for sale, consider stepping back from daily operations. Hiring a foreman or manager to take over your responsibilities can make the business more attractive to buyers. A great test is whether you can take a month-long holiday without disrupting business operations.
Get Your Financials in Order
Prospective buyers will want to see clean, well-organized financial records. Work with your accountant to prepare a sale-ready set of accounts, ensuring that:
- End-of-year financials are up to date
- Profitability and cash flow are clear
- Any discretionary spending is minimized
- Tax obligations are met
- Supplier agreements, employment contracts, and lease agreements are documented and accessible
Document Operations & Processes
A business with clear, documented systems is far more attractive to buyers. Create standard operating procedures (SOPs) outlining key business processes, including job scheduling, invoicing, supplier management, and customer service. This not only makes the transition easier for a new owner but also increases business value.
A Case Study – Laser Plumbing Wellington
Laser Plumbing Wellington is a well-established plumbing business servicing the Wellington region, offering Plumbing, Gas Fitting, and Drainlaying services. The company operates across various sectors, including residential, commercial, new builds, solar, roofing, and plumbing maintenance.
Founded in 1994 by Simon and Tracey Walker, the business has been successfully run for 30 years with the support of a dedicated General Manager. As they approached retirement, Simon and Tracey sought professional assistance to ensure a smooth and successful sale process.
Before listing the business Ollie from ABC Business Sales conducted a thorough review and preparation process. This involved assessing the business’s operational structure, financial performance, and market positioning. A comprehensive strategy was developed to optimise the business’s appeal to potential buyers, ensuring it was well-prepared for the sales process.
With the business structured for sale, Ollie prepared a professional Information Memorandum that detailed the company’s operations, services, personnel, clients, key financial highlights, and fiscal information. ABC marketed the business discreetly through multiple channels, including social media, online platforms such as Trade Me, and direct outreach to industry players. It is understood that you may not want to tell the world your business is for sale, so we have discreet ways of doing this.
Ollie managed all buyer inquiries, qualification processes, and mediated multiple meetings between interested parties and the vendors. Ultimately, Laser Plumbing Wellington was acquired by an existing plumbing business looking to expand its market presence.
Ollie led negotiations, oversaw the due diligence process, and guided both parties toward a successful outcome. The final sale price was well within the appraised valuation, ensuring Simon and Tracey received a return that met their expectations.
Now, the sellers are enjoying the rewards of their hard work, spending their retirement traveling New Zealand in their campervan, knowing their business legacy continues to thrive.
Final Thoughts
Preparing your business for sale doesn’t happen overnight. By taking these steps early, you’ll increase your chances of a successful and profitable sale while ensuring your business remains strong and operational throughout the transition.
Thinking about selling your business? Get in touch with Ollie Wright from ABC Business Sales, he’s a business broker who understands and specialises in the construction & trades industry, to start the process today.