Selling your tree care business is one of the hardest things any business owner can do. Not only is it difficult to understand the market value of your tree care business and get the right purchase price, but there are personal factors that weigh heavily in the decision-making process.
If you think of your business as your baby—you're not alone. Scientific studies show that most entrepreneurs show similar neural bonds to their businesses as parents do to their children. You grew it, nurtured it through ups and downs, and developed deep personal connections not only to the business but also to the people – the team members, the customers, the suppliers, and other stakeholders. Selling your tree care business the right way involves not only getting the financial aspects right but also making sure your business legacy lives on even after you transition out of the day-to-day.
It's easy to get caught up in a deal process and make mistakes. Common regrets from business owners in the tree care industry include:
Here are some common mistakes that lead to those regrets.
You might hear investors talk about push and pull factors for selling your business. Are you being pushed toward a sale by forces outside of your control like tough competition or personal reasons like health issues or is something pulling you out of the business – like the need for the business to grow beyond your capital or your desire to pursue another opportunity?
Do you understand whether your motivations for selling your tree care business are value-creating or value-destroying?
Examples of value-creating reasons to sell include:
Value-destructive reasons for selling your business might include:
None of these “value destructive” reasons on their own are going to destroy your business, but understanding the concerns each one brings up for buyers is important. If you rush into a deal or go into it for the wrong reasons, you might not get what's best for you or your company's future, and buyers are even more likely to walk away during the deal process. If you know why you want to exit, you can better prepare yourself to make strong decisions that protect the future of your company after you’ve transitioned out of the day-to-day operations.
There are so many complications to think of when you sell your tree care business. Not only do you need to think about what the company will look like after you're gone, but how will you preserve the culture you’ve worked hard to create and protect the livelihoods of your employees after you leave?
The best way to protect employees is to find a buyer who is aligned with your team's vision and culture, and who sees the value in growing your business and the opportunity in the tree care industry.
The fear of the unknown can harm staff morale and performance. Carefully manage when and how you communicate the sale or merger with them. Walk them through your plans to protect the company's legacy and your shared vision with the new owners. Set your staff up for success by helping them see this change as an opportunity and not a threat. It's important that you keep your team and staff informed post-sale to help successfully manage the transition for all involved.
Choosing the wrong buyer can cause your company to crumble behind you, which can lead to real regret for many business owners. Decide what your personal priorities are – is it the highest purchase price or the best fit with the future owners? What do you want your involvement to look like post-closing? What changes will happen to your tree care business post-closing?
Vet potential buyers carefully. This framework is a good starting place:
Interview buyers: Discuss your vision and reasons for selling. Try to understand their motivations for buying your tree care business. Ask questions like "Why do you want to buy my business?" and "How can you help this company grow?".
Research their history: If you're working with an investor or an organization that acquires companies regularly, find out what their past results were like, especially in the tree care industry or similar industries. Did they grow and expand their new acquisitions? Ask for references or additional information about their track record.
Get a good sense of your potential buyer before selling. Once you get the deal done, it’s too late.
Preparation is the key to a successful deal process. That means things like:
You should also do market research on the tree care industry, and if you really want top dollar, prepare a future-focused business plan and a proposal for long-term growth that can help investors see the future value of your organization.
Market research in the tree care industry will help you value your business appropriately. There are several ways to value a company, and the truth is that your company is only worth what someone is willing to pay for it.
Be careful not to fall into the trap of putting a value on your business because of something you heard or overheard at a tree care trade show, conference, or at country club. There are many variables that go into the valuation of a business from size to geography, revenue profile, customer mix, assets, management teams, and market conditions — every business is different and has a different value at different points in time.
Selling your business without legal or financial experts can lead to unnecessary mistakes or self-imposed problems. The right professionals and “deal team” can prepare your business for sale and help you run a successful deal process, giving you confidence that you put your best foot forward.
Engage professionals early in the process and let them guide you through the steps to have the best chance at a successful sale. It’s ideal to find people who are M&A specialized and familiar with the tree care industry norms.
Transitioning your tree care company to new ownership should be a time of excitement and hope for the future, not a time of regret and remorse. That's why a partner like DealPoint is so effective in helping deals and companies succeed.
We're a buy-side business broker, which means we work with the folks looking to acquire your tree care business. Unlike many buy-side brokers, DealPoint works with multiple buyers interested in the tree care industry so we can find the right fit for both buyer and seller.
Working with our group of investors will help you find the right buyer for your tree care business, while also giving you the opportunity to meet your financial goals. We want to help shape the future of your tree care business and to do what we can to help everyone have a positive outcome.
When you prepare to sell your tree care business with clear intentions and expectations, you’re more likely to find the right buyer and set your company up for success in the future. You want to look back and be happy with your decision to sell and the way you ran your deal process.
Getting Prepared: what are some questions buyers might ask you?
Financials and Revenue:
1. What are the main sources of revenue for your tree care business (e.g., tree trimming, removal, stump grinding, emergency services)?Customer Base and Market Position:
6. How do you acquire and retain customers? What is your customer satisfaction rate and referral rate?
7. What is your market share and growth rate in your service area? How do you measure and track your market performance?
8. Who are your main competitors, and how do you differentiate yourself from them? What are your unique selling points and competitive advantages?
9. What is your customer churn rate, and what strategies do you employ to minimize it?
Operations and Workforce:
10. What is the size and structure of your workforce? How many arborists and tree care specialists do you employ, and what are their experience levels?
11. What training and certification programs do you have in place for your employees?
12. How do you manage scheduling and dispatching for tree care projects? Do you use any specialized software or systems?
13. What is your inventory management process for tree care equipment and supplies? How do you handle supplier relationships and procurement?
14. How do you ensure quality control and compliance with industry standards and regulations?
Equipment and Technology:
15. What types of tree care services do you offer (e.g., pruning, removal, planting, health assessments)?
16. What is the age and condition of your tree care equipment and vehicles?
17. How do you incorporate new technologies and innovations in tree care (e.g., tree health monitoring, eco-friendly practices)?
18. What is your approach to maintaining and upgrading your equipment and vehicles?
Market Trends and Industry Challenges:
19. What are the current and future trends in the tree care industry, and how do you adapt to them?
20. What are the main challenges facing the tree care industry (e.g., regulatory changes, environmental concerns, labor shortages)?
21. How do you handle seasonal fluctuations in demand for tree care services?
Risk Management:
22. What are the main risks and uncertainties facing your tree care business, and how do you mitigate and manage them?
23. Do you have any outstanding debts or liabilities, and how are they being managed?
24. How do you handle warranties and guarantees for your services?
Growth and Future Plans:
25. What are your short-term and long-term goals and plans for your tree care business? How do you measure and evaluate your progress and performance?
26. Are there any potential expansion opportunities or new markets you are considering?
27. What investments or changes do you think the business will need in the next 3-5 years to stay competitive and grow?
Motivation for Sale:
28. What are the main reasons and motivations for selling your tree care business?
29. What are your expectations and preferences for the sale process and the potential buyer?
30. Are there any pending or potential legal issues, disputes, or regulatory challenges that the business faces?
These questions should help you gain a comprehensive understanding of the tree care business's operations, financial health, market position, and future prospects, allowing you to make an informed decision about the acquisition.