Think Like A Sky Jumper, Merger And Acquisition Advice By John Weber

A Contributing Blog Post By

John B. Weber, Vice President, Water Street Advisors, LLC. a boutique Merger and Acquisition firm serving businesses in the Midwest.

Those of us in the Mergers & Acquisition industry are trained to stay abreast of breaking news affecting the economy.

Merger and Acquisition Industry

Here is what John has to say about exiting your business: “If you want to sell your business but have been waiting for the perfect time when things rebound it may be a very good time to revisit a sale. Consider that buyers will be more willing to accept explainable poor performance during this time especially if the business bounces back quickly when the economy picks up again.”

John went further and stated in his recent post, Think Like A Sky Jumper, that this is a great time to make sure that your corporate records are correct, that you have a succession plan in place, that you have a funded buy-sell agreement, and that you have talked through your plans with your family.

With permission to re-post, we’re bringing you the full article to read through..

During this time, we start by first extending our hopes that you and your family, employees, associates, and friends have remained healthy, safe, and secure during this most tumultuous time. 

We also hope that you have adapted to working from home. Some, like myself and my partners at Water Street Advisors do this every day. Whether you are a veteran at it or just finding your way, the change of pace offers a time of catching up, prioritizing, and contemplation. Those of us in the Mergers & Acquisition industry are trained to stay abreast of breaking news affecting the economy. The last few weeks have been a veritable sea swell of information from well-meaning experts offering amazing opportunities for learning and enrichment to chart a course through this crisis. We have seen the assistance of leaders from all branches of Government, who refreshingly have come together to try to offer solutions. 

Economy and the new normal

Whether you believe that this will be a “U” or “V” shaped downturn in the economy, at some point we must start focusing on getting back to normal, whatever the ‘new’ normal will be. I have never snow skied, so I have no idea what it would be like to perform a ski jump. But, I have jumped some things (on either a bike or a sled when I was a much more flexible kid), and there is a point that you can sense when to push downward against gravity just before you are about to become airborne. Thinking positively, perhaps we can successfully launch once we sense we are near being airborne again.

Some things to consider: 

• If you are in the process of accessing the funding made available under the CARES Act, or if you are in the process of selling your business, it will be important during this time to keep detailed records of expenses incurred and revenues not realized as a result of the Covid-19 virus actions. This information will be important to have to document the reasons/uses for the loan proceeds, and reasons why this was a complete anomaly in your business. 

• While it may not be as robust of a Seller’s market as it was prior to this March, there will still be a large amount of cash looking for investments when things begin to return to normal. Remember, this is not a replay of 2008 – banks are much stronger financially and the US Government has just pumped trillions of dollars into the economy. 

• If you want to sell your business but have been waiting for the perfect time, when things rebound it may be a very good time to revisit a sale. Consider that buyers will be more willing to accept explainable poor performance during this time especially if the business bounces back quickly when the economy picks up again. 

• Get your house in order. This is a great time to make sure that your corporate records are correct, that you have a succession plan in place, that you have a funded buy-sell agreement, and that you have talked through your plans with your family. Those things that you did not have time for when you were busy - now is a good time to tackle them. 

• Need advice or advisors to help you with the items in that last bullet point? We are ready to listen and help. Being ready to go to market when the clouds clear will put you ahead of what could be a big crowd. 

More about John B. Weber

John provides turn-key sell-side services for business owners looking to exit their companies.  He is located in Naperville, Illinois, and brings many years of expertise to his clients as a former commercial banker, board member, and former Executive Director of a non-profit public/private partnership that assisted minority-owned businesses in accessing capital.

John B. Weber

Brings over 30 years of transaction experience in helping companies obtain debt and acquisition financing.

About John & His Current Listings

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Effect of COVID-19 to Sell Your HVAC Business

A Guest Blog Post By

Patrick Lange

Are you considering selling your HVAC Company in the next 12 to 18 months? This post is meant to help you through understanding the current M&A market amid the Coronavirus pandemic.

Here is what Patrick has to say about the effect of COVID-19 to sell your HVAC business.

Efforts to Sell Your HVAC Business

Unless you have been stuck in an attic replacing ductwork for the last two weeks, you have been overrun with speculation on what is in store next for this fast-spreading virus. Since I do not work for the Center For Disease Control (CDC) or have a crystal ball to tell me what to expect from this Virus, I will leave that to the professionals.

What I want to talk about is what it means for those who are considering selling their heating and air companies in the next 12 to 18 months. As I am sure you have already experienced with your business, there is an apprehension from your customers for letting your technicians in their homes. I have had reports out of the Tampa Florida area of gated communities that will not allow service companies to enter.  As we all know this is not a good time of year to have things slow down, or fall behind. Many companies are just starting to ramp up to perform their maintenance visits, and if they end up a month or two behind on those it can spell disaster for the start of summer. In addition to the increased workload, we all know a service call is more profitable than maintenance, and having techs catching up on maintenance agreements and not running service is a recipe for a bad year.

Thinking of selling or buying a heating and air company, we can help. We specialize in the sale of heating and air businesses.

The Impact on the economy

The federal government has already cut interest rates in an effort to push off a slowdown, but as you know by now, the good times and growth cannot last forever. Just looking at the school shutdowns, sporting events cancelled, and millions of people told to stay home and not go to work, there is going to be a financial impact of this. We have already seen record declines in the stock market which may not be over yet.

This is all happening after many parts of the country, especially the southeast had a mild summer in 2019 and an almost nonexistent winter. Buyers are paying a price based on cash flow, so it only makes sense if cash flow is down, so will sales prices and it could turn what has been a very strong sellers’ market in a buyers’ market quickly.

The good news

As I have said many times over the years in articles just like this, I own, and help others buy and sell heating and air companies because I STRONGLY believe in the industry. If companies are run properly they typically do well in times of slowdown and even during a recession. As other industries are being crushed, people still want cold air in the summer and warm air in the winter and are willing to pay for it. Companies who have strong maintenance programs and quality employees may get behind for a bit, but they will bounce back fairly quickly. That is exactly what buyers are looking for.

I have talked in the past about the push of private equity buyers trying to get into the industry, and times like this are why. Those who have built their companies on a strong foundation, and have a system to train and retain employees are in the driver’s seat to command a premium if they choose to sell.

These can be great times for those who have put in the work, and a drastic wake up call for those who have not. If you have built your business on the reliance of new construction installs and not repeat income of PMA’s, the next 12 to 18 months may be very challenging, especially if you are looking to sell. Hopefully you have the ability to withstand it, and make corrections so the next time it happens you are better prepared.

I pray that your families and loved ones remain safe and healthy during these uncertain times, and if I can help out in any way please let me know. 

More about Patrick Lange

Patrick has been a serial entrepreneur his entire life. He has not only helped others buy and sell businesses with great success, but he has done it himself with his own businesses as well. He specializes in helping those who are looking to buy or sell heating and air and plumbing companies.

Patrick Lange

Certified Business Intermediary who serves business owners in the Florida, Georgia, Alabama, and Texas markets with exit planning, business acquisition & sale.

About Patrick & His Current Listings