For every 10 businesses listed for sale (of any kind), only 1-2 companies are actually sold, according to business broker community statistics. For those that do sell, deals often take 9-12 months to happen. The good news for limo business owners is that increasing your odds of a quick and fair-priced sale is often as simple as getting an accurate business valuation. In the limo industry, most failures to make a deal happen have nothing to do with the business being sold and everything to do with a broker who just doesn’t grasp the complexities of the transportation industry.
Accurate valuation and documentation
Most general business brokers are unfamiliar with the quirks of the transportation industry. As such, they often have trouble figuring out how to value a limousine business. It’s common for brokers to slap an approximate number up on a listing with little explanation to buyers as to how that value was reached. Imagine putting a house on the market for an overly-aggressive price tag and having to repeatedly reduce the asking price. Similarly, taking your business to market with the wrong price can allow your otherwise marketable company to sit untouched for a year or more. If you want a buyer to bite, you need to provide documentation to back up your requested price. When prospective buyers are able to visualize the value in your business, you stand a better chance at securing your best possible price in a short amount of time.
Benefits of flexibility
Value is not a static number. Because it depends on business variables, it can always be improved. Business owners can increase the likelihood of a timely sale in the future by taking steps to make their business more valuable in the present. Part of any good exit strategy involves regularly assessing your situation. Price can change based on timing – for instance, the state of the business market or current industry regulations – as well as factors within your control. For example, can you make adjustments to strengthen your management team? Could you consult with advisors about your finances and tax strategy? How about touching bases with clients to ensure their satisfaction?
Flexibility also comes in handy when negotiating with a buyer. Some sellers feel they need to stick to their guns about deal structure to the bitter end. But an unwillingness to make even the smallest of concessions can cost you the deal. If you lose your best buyer, it may be months before you’re offered another opportunity.
Finding the right buyer
Many owners will list a limousine business for sale locally and perform very little marketing. This may be the more comfortable route, but it significantly limits the pool of potential buyers – which in turn increases sales time. Local business owners are often wary of dealing with competition, even when it comes to purchasing a competitor. Nearby companies that can afford to pay a good price may be far and few between. An industry-specific broker, however, can make connections with businesses of all sizes all over the country. For instance, The Tenney Group not only manages a large industry directory, but also directly targets top businesses and educates these firms about your company’s value. This approach frequently results in sales, whether or not the targeted businesses were initially in the market to make an acquisition.
With all the right moves, the odds of selling increase significantly. The Tenney Group has slashed average sales time for transportation businesses to less than five months.