Your moving 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 moving 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 moving industry - like are there headwinds or tailwinds in the moving industry, and do buyers find the moving industry 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 moving business.
Every business - even within the moving 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 moving business - would you want to stay on board in some capacity or simply transition out of the business and the moving 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 moving 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 moving 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 moving 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 moving 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 moving 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 moving business. Email us to get more info. Info@DealPoint.com
We also thought it might be useful to include a "State of the Moving Industrt" snapshot for your reference as you're thinking about selling your moving business.
The moving industry, encompassing residential, commercial, and specialized relocation services, is a vital component of the broader logistics and transportation sector. This industry includes a diverse range of services, from local and long-distance moves to international relocations and specialized handling for delicate or high-value items. With the ebb and flow of population dynamics, housing trends, and economic factors, the moving industry continually adapts to changing market needs. Let’s delve into the key aspects shaping the moving industry today.
Key Drivers for Growth of the Moving Industry
Several factors are driving the growth and evolution of the moving industry:
Urbanization and Population Mobility: As people move to urban centers for job opportunities and lifestyle preferences, the demand for residential moving services increases. Urbanization trends and the appeal of metropolitan areas drive a steady need for relocation services.
Real Estate Market Dynamics: The health of the real estate market significantly impacts the moving industry. High demand for housing, fluctuating home prices, and the availability of rental properties stimulate residential moves, while commercial real estate trends drive business relocations.
Corporate Relocation Programs: Companies relocating employees or entire operations often rely on professional moving services. Globalization and the need for talent mobility fuel corporate relocation, driving demand for comprehensive moving solutions.
Technological Advancements: Technology is transforming the moving industry through online platforms that simplify booking, digital inventories for tracking belongings, and advanced logistics for optimizing routes and schedules. These innovations enhance customer experience and operational efficiency.
Consumer Preferences for Convenience: Modern consumers seek convenience and reliability in their moving experiences. Services such as packing, storage, and flexible scheduling cater to these preferences, encouraging the use of professional movers over DIY options.
State of M&A in the Moving Industry
Mergers and acquisitions (M&A) in the moving industry are influenced by various strategic goals and market dynamics:
Market Expansion: Companies seek to expand their geographic footprint and service offerings through acquisitions. Buying regional or niche movers allows larger firms to quickly enter new markets and enhance their competitive position.
Service Diversification: Acquiring companies with specialized services, such as international relocation or handling of unique items, helps movers diversify their capabilities and appeal to a broader customer base.
Operational Synergies: M&A activities often aim to achieve operational efficiencies, such as optimized fleet management, consolidated logistics networks, and enhanced technology platforms, leading to cost savings and improved service delivery.
Technology Integration: The integration of technology is a key driver for acquisitions. Companies look to acquire firms with innovative technological solutions to enhance their operational processes and customer offerings.
Private Equity Involvement: The stable revenue streams and growth potential in the moving industry attract private equity investors. These firms seek to capitalize on consolidation opportunities and drive value creation through strategic management and expansion.
Considerations for Valuation of Companies in the Moving Industry
Valuing moving companies involves several critical factors that reflect their operational strengths and market position:
Revenue Stability and Growth: Consistent revenue streams and growth potential are crucial for valuation. Companies with steady income from repeat business, corporate contracts, or long-term agreements are highly valued.
Fleet and Equipment Quality: The condition and modernity of a company's fleet and equipment directly impact operational efficiency and cost structure. Well-maintained, up-to-date assets enhance a company's value.
Market Share and Brand Reputation: A strong market presence and a good reputation for reliability and quality service boost a company's valuation. Established brands with loyal customer bases are seen as lower risk and more attractive to buyers.
Service Diversity: Companies offering a wide range of services, including packing, storage, and specialized moving, are valued higher due to their ability to meet diverse customer needs and capture more market opportunities.
Technology and Operational Efficiency: Investment in technology for logistics management, customer service, and operational processes enhances efficiency and scalability, positively impacting valuation.
Management Expertise: The experience and stability of the management team play a significant role in sustaining growth and navigating industry challenges, contributing to the overall value of the business.
Why Now Might Be a Good Time to Consider Selling a Moving Business
Several factors make the current market environment favorable for selling a moving business:
High Demand for Moving Services: With ongoing urbanization, corporate relocations, and dynamic real estate markets, the demand for moving services remains robust, making moving companies attractive targets for acquisition.
Active M&A Environment: The consolidation trend in the industry and the interest from private equity firms create a favorable environment for sellers. Buyers are keen to acquire businesses that offer market expansion and service diversification opportunities.
Technological Advancements Enhancing Value: Companies that have integrated advanced technologies into their operations are particularly appealing to buyers looking to leverage innovation for competitive advantage.
Strong Financial Performance: Businesses with stable revenues and profitable operations are highly attractive in the current market, providing a lucrative opportunity for owners to capitalize on their investments.
Strategic Importance of Niche Services: Moving companies with specialized services or unique market positions are highly valued for their ability to address specific customer needs and tap into niche markets.
The moving industry is experiencing sustained growth, driven by urbanization, real estate dynamics, and evolving consumer preferences for convenience and quality service. The active M&A landscape and favorable market conditions present a compelling case for moving business owners to consider selling. By understanding the key growth drivers and valuation factors, stakeholders can make informed decisions about their future in this essential and dynamic industry.
