Your elevator installation & maintenance business is more than just your job or your career. It's your life, your legacy - the result of years of mental, physical, and emotional labor. Your business is a part of who you are and why you get up in the morning.
But there comes a time for every business owner when it's time to make a change. Maybe it's retirement or maybe the business is ready to go to the next level and you need outside help. Knowing when and how to sell your elevator installation & maintenance business is difficult. As with any difficult business decision, there are many factors to consider carefully. The decision will come down to questions like:
There are also questions that are specific to the elevator installation & maintenance industry - like are there headwinds or tailwinds in the elevator installation & maintenance industry, and do buyers find the elevator installation & maintenance attractive?
The answers to questions like these will guide you in selling your business and having a good outcome. It's a mix of personal, business, and market factors. You want to look back and feel happy with the decision you made. When you decide to sell your business, you can't un-do it. If you're ready to think through your exit strategy - let's dig into these key questions and how they apply to your elevator installation & maintenance business.
Every business - even within the elevator installation & maintenance industry - is different, and every business owner is different. There are many personal reasons you might want to sell your business or part of your business. Reasons range from:
These personal reasons are just that: personal. They'll vary from business owner to business owner and are always influenced by many factors, including family members, friends, and employees. They are important to consider as you think through your next steps and whether you're ready to sell. You want to do what's best for your business, but you also want to do what's best for you personally and for your family. You are in control, and you can decide when the timing is right. You should also think through what you would want to do after you sell your elevator installation & maintenance business - would you want to stay on board in some capacity or simply transition out of the business and the elevator installation & maintenance industry?
You might be ready to sell - but is your business? It's important to determine whether your business is well-positioned to take to the market. You want it to be appealing to elevator installation & maintenance industry buyers and investors to increase the valuation and improve the odds of getting a deal done. Here are a few important considerations:
By getting your business ready to sell, you're positioning yourself for success in the deal process, and you're creating value. If your business isn't ready to sell and you go to market anyway - you're destroying value. You may not have a choice, but if you have a choice, you only want to sell when your business is ready.
In some situations, business owners feel like their company can do more with additional capital or resources. You've done the math and know exactly how to capitalize on a growing market, but you aren't ready or able to make that jump yourself. For example, the next evolution of your business may require more funding than you're willing to invest or borrow from a lender.
If your business needs new partners to fuel growth, you should spend some time putting together the business case to help investors see your vision. How much capital do you need? How would you use that capital? How much growth would their investment generate? What other resources do you need? You might want to open a new branch location. You might want to hire new employees or invest in new equipment. Whatever your expansion requires, it's important to put together a clear plan with defined metrics for success.
It's also important to think through what your personal role would be in the next phase of growth. Would you want to remain in charge - or would you like to transition to a new executive to grow the business, which might be important if the next phase of growth requires a skillset beyond your capabilities or interests. New ownership or investors can help inject new capital and new energy into your business, but you want to be able to point them in the right direction. A carefully thought-out plan will make it easier to attract investors and align everyone.
There are many different types of business buyers who might be interested in the elevator installation & maintenance industry, and they all approach deals differently. Here are a few common ones to familiarize yourself with:
Each of these types of buyers has different investment objectives, timelines, and strategies. Some strategic acquirers, for example, may want to re-brand your business on Day 1. Does that matter to you? Some Private equity firms may ask you to "roll over" equity into their deal, meaning you still have money invested in the business under their control. Does that appeal to you as a way to get a "2nd bite at the apple" and benefit from their investment or do you see that as un-appealing? Family offices tend to have longer investment time horizons and hold times with a slower pace - do you think that benefits your business or not?
With each type of buyer, you'll have to consider your priorities and what you're looking to get out of the deal. Here's a framework and exercise that might be helpful. Rank these in order of importance to you:
Here's a scenario to help clarify: the highest offer you get is from a buyer who you think won't be a good fit for your elevator installation & maintenance business. Do you take the offer, or do you take a lower amount from a buyer who you think is a better fit and would protect your legacy better?
As you start talking with potential acquirers, you can interview them as much as they're interviewing you. Ask them about their approach - what would they plan on doing on Day 1? Ask them about how they typically structure their deals, and what role business owners usually play post-acquisition. The more questions you ask, the more you'll understand the way they look at your business, and if you're ready for them to buy your business.
You should also ask to spend some time together in-person with the buyers. Get to know them as people. See for yourself how they operate, what they care about and prioritize, and how they approach other people. Are they respectful to the wait staff at the restaurant or jerks? Do they get the most expensive bottle of wine or drink a local beer? What is their definition of personal success?
Finding the right buyer comes down to a key question: are they a good match for you and your company?
When you're thinking about selling your elevator installation & maintenance business, valuation is top of mind, and for good reason - for many business owners, the majority of their net worth is tied up in the value of their businesses. How much your business is worth is a difficult question to answer – because the truth is that the value of a business depends on a large number of variables that are changing constantly. Many business owners say that they'd be ready to sell "for the right price," but what does that mean?
Let's start by defining the "valuation" of your business. For our purposes, it’s not what the business is worth to you – because of the lifestyle it gives you, the company car, the perks, or the cash it generates for you, or the prestige. It’s also not what you think the business could sell for based on something you heard at an industry conference or what someone told you while you played golf at the country club. Too many owners make the mistake of thinking they can sell their business for the same multiple or valuation that someone else got for their business. This is a dangerous assumption that often leads to disappointment when confronted with reality: every business is different and valuations vary significantly, even within the same industry. Don’t fall into the “country club” valuation trap.
So what is the definition of "valuation" then? There are technical definitions of “fair market value” that are sometimes used by accountants, financial professionals, the IRS, and valuation experts. These more technical valuations can be calculated using several different complex methodologies. These methodologies include income-based approaches, market-based approaches, and asset-based approaches, which all generally involve analyzing financial statements, conducting market research, assessing comparable transactions, and determining appropriate valuation multiples. Even these more technical approaches to valuation are still very subjective. Let’s keep it simple: let’s think of value as what someone else will pay for your business right now.
The best way to get a valuation of your business, is to have a buyer make you a real offer. Short of that, you can look for indicators in the market and advisors to help you at least get a potential valuation range.
Understanding acquisition activity in the elevator installation & maintenance industry and in your local market can also help give you a sense for if valuations are trending higher or lower. Right now, for example, Private Equity buyers are very active and becoming more active, driving up valuations in many of their target industries. Many advisors are expecting to see another uptick in investment as well as private equity mergers and acquisitions in the near future. This type of activity in the marketplace creates higher valuations due to competition for deals and great exit opportunities for business owners.
At DealPoint, we know what it's like to sell your business. That's because, as business owners ourselves, we've done it before. Our deal advisors know what it takes to get a deal done. It's a time-consuming process that can be a stressful, emotional roller-coaster from initial buyer meetings through due diligence. You want to be able to look back and not only be happy with the decision you made - but also with the decision-making process.
We'd be happy to help you how we can with this process. Most importantly, as a buy-side broker, we want to help you find the right buyer for your elevator installation & maintenance business. Email us to get more info. Info@DealPoint.com
We also thought it might be useful to include a "State of the Elevator Installation & Maintenance Industry" snapshot for your reference as you're thinking about selling your elevator installation & maintenance business.
The elevator installation and maintenance industry plays a crucial role in ensuring efficient vertical transportation in residential, commercial, and industrial buildings worldwide. This industry encompasses the installation, maintenance, modernization, and repair of elevators, escalators, and moving walkways. As urbanization continues to drive the construction of high-rise buildings and infrastructure projects globally, the elevator installation and maintenance sector remains integral in facilitating safe and reliable vertical mobility. Let's explore the current state of this industry and the factors influencing its growth and market dynamics.
Several key factors are driving the growth of the elevator installation and maintenance industry:
Urbanization and High-Rise Construction: Rapid urbanization and population growth in urban centers increase the demand for high-rise buildings, creating a need for elevator installations and upgrades to enhance building functionality and efficiency.
Aging Infrastructure and Retrofitting: Aging elevator systems require modernization and upgrades to comply with safety regulations and energy efficiency standards. Retrofitting older buildings with new elevator technologies drives industry growth.
Technological Advancements: Innovations in elevator technologies, such as smart elevators with IoT connectivity, energy-efficient systems, and predictive maintenance capabilities, enhance safety, performance, and operational efficiency, stimulating market demand.
Regulatory Compliance: Stringent safety regulations and building codes mandate regular inspections, maintenance, and upgrades of elevators, escalators, and related equipment, ensuring compliance and driving service demand.
Sustainability Initiatives: Increasing focus on sustainable building practices encourages the adoption of energy-efficient elevators and eco-friendly materials in construction projects, contributing to industry growth.
Mergers and acquisitions (M&A) in the elevator installation and maintenance industry are influenced by strategic objectives and market dynamics:
Market Consolidation and Expansion: Larger elevator service providers acquire regional firms or specialized companies to expand their service capabilities, geographic reach, and customer base. This consolidation strategy enhances market share and competitive positioning.
Diversification of Service Offerings: Acquisitions enable companies to diversify their service portfolios, such as adding maintenance contracts, modernization solutions, or specialized elevator technologies. Diversification enhances service delivery and customer value proposition.
Access to Technology and Innovation: Acquiring firms with advanced elevator technologies, digital platforms for service management, or predictive maintenance capabilities accelerates technological integration and operational efficiency.
Economic Scale and Efficiency Gains: Merged entities achieve economies of scale through streamlined operations, centralized procurement, and shared resources, reducing costs and improving profitability.
Strategic Alliances and Partnerships: Collaborations through acquisitions or joint ventures with complementary businesses, such as building management systems or smart city infrastructure, drive innovation and service expansion.
Valuing companies in the elevator installation and maintenance industry involves critical factors reflecting operational strengths and market position:
Service Contracts and Revenue Stability: Long-term maintenance contracts with building owners, property management firms, and government agencies provide predictable revenue streams and enhance company valuation.
Technological Infrastructure and Innovation: Investment in advanced elevator technologies, IoT integration, remote monitoring systems, and predictive analytics capabilities add value by improving service efficiency, reliability, and customer satisfaction.
Customer Relationships and Market Reputation: Established relationships with building owners, architects, contractors, and facility managers, along with a strong reputation for quality service and reliability, bolster company valuation.
Regulatory Compliance and Safety Records: Compliance with stringent safety standards, regulatory requirements, and industry certifications mitigates operational risks and enhances company valuation in the safety-conscious market.
Financial Performance and Profitability: Metrics such as revenue growth, profit margins, EBITDA (earnings before interest, taxes, depreciation, and amortization), and cash flow stability influence company valuation and attractiveness to potential buyers.
Several factors make the current market environment favorable for selling an elevator installation and maintenance business:
Growing Demand for Vertical Transportation: Increasing urbanization, infrastructure development, and aging elevator systems drive demand for installation, maintenance, and modernization services.
Consolidation Opportunities: The trend towards industry consolidation and strategic acquisitions presents opportunities for owners to capitalize on market demand and achieve favorable exit strategies through acquisition.
Technological Advancements Driving Value: Companies with advanced elevator technologies, IoT integration, and predictive maintenance capabilities are highly valued for their operational efficiency and competitive edge in the market.
Sustainability and Regulatory Compliance: Businesses compliant with environmental sustainability standards and stringent safety regulations command premium valuations, appealing to buyers focused on long-term investment sustainability.
Profitable Market Conditions: Favorable economic conditions, stable cash flows from service contracts, and profitability metrics enhance the attractiveness of elevator installation and maintenance businesses to potential buyers.
The elevator installation and maintenance industry is essential for supporting vertical mobility in urban and commercial developments globally. With increasing demand for modernization, regulatory compliance, and technological innovation, now is an opportune time for owners of elevator installation and maintenance businesses to consider selling. Understanding the key growth drivers, valuation considerations, and market dynamics is crucial for maximizing the value of their businesses in this evolving and essential industry.