Gokul here, and this time I’m back to talk about what the top performers are doing to exit well. You may have no plans of leaving your business anytime soon, but eventually, we all do…and when that time comes, wouldn’t you prefer to be in the best possible position?
I’ve brokered over 300 transactions, and I’ve noticed a common thread among businesses that attract multiple buyers, receive numerous offers, and sell for the most money.
So, let’s get into it.
1. They Develop Great Bench Strength
Every top seller has great “bench strength,” meaning they have intentionally built a strong team with a second-in-command who can run the company without the owner if necessary. From a buyer’s standpoint, it makes sense why this is attractive. A company is only as good as its people, and if everyone leaves when ownership changes, the company ceases to exist.
This is easy enough to grasp, so why doesn’t everyone do it? I’ve found that usually what keeps owners from building this type of team is limiting beliefs, such as, “I can’t trust anyone,” “No one will take care of my company like I will,” etc. Ultimately, these beliefs limit a business’ growth because they prevent owners from stepping out and letting others bring their ideas, perspectives, and talents to the team.
I’ve seen companies that have sold because they believe they’re maxed out in their market, only to have someone come along who knows nothing about the industry but knows a lot about leadership and team building a team, purchase the business, and quadruple its size in 3-4 years. So, if your company would crumble if you left for a two-week vacation, think about what type of person you need to add to your team or what you need to let go of so your internal talent can rise up.
2. Someone Outside is Doing Their Books
In my experience, an internal bookkeeper can tend to develop their own accounting language, taking detours and creating workarounds and policies that make sense to them but won’t make sense to a buyer from the outside looking in. To me, this matter is simple—everything with your books should be done by someone external and according to strict accounting principles.
The best of the best that I’ve seen sit down with their bookkeeper on a weekly basis to make sure their books are locked and loaded. If it’s done weekly, it can be a short meeting because things aren’t piling up. These regular meetings also help keep owners from running into a common pitfall—running your business with your bank account. Rather than thinking in the short term, businesses should be run through financial statements, and this can only be done by keeping really great books. You wouldn’t drive a car without a speedometer, so why run a business without knowing where your finances are?
If you don’t have anyone who is devoted to running your books, it’s time to find one. I recommend checking with your local chamber of commerce for referrals, hiring an accounting firm, or bringing in an outside CFO. Just be sure that someone is doing your books on a regular basis so all the dots connect when a buyer comes to look at them.
3. Their Revenue is Diversified
Last but not least, the restoration companies that sell for the most money have a few things in common when it comes to revenue: no single source makes up more than 10% of the total revenue, and no one job contributes more than 3-4%.
This protects the business from major disruptions. If a few accounts leave after a sale, it won’t cripple the company because revenue streams are spread out and stable. Buyers want to see long-term security, and a well-diversified client base provides exactly that.
What it really comes down to is top performers implement key business practices that would be beneficial for all restoration companies to adopt. They develop strong teams, keep their financials in check, and diversify revenue, forming the foundation of a resilient business. Whether you sell in five years or never, setting yourself up this way means that when the time comes, you’ll have options.