Moving service companies are in relatively high demand due to a growing housing market and the expectation for non-residential property construction in the years to come. In this guide, we provide everything you should know about selling a moving service company for fair market value or greater. Of course, we recommend speaking directly with a business broker for the most personalized and helpful advice. However, this guide can help you get started with your sales plan.
About The Moving Service Industry
The moving service industry primarily provides local and/or long-distance trucking of household and commercial furniture and equipment (Business Reference Guide). An expanding housing market has driven growth over the past decade. Valuations are currently high, but some project an industry downturn in the years to come. Here are the most recent industry numbers and projections:
- There are approximately 19,700 advertising agencies in the U.S.
- There was a 1.0% annual growth for the advertising industry from 2018 to 2023
- The advertising industry generates $19.4 billion in annual revenue
- The annual profit for the advertising industry is $1.1 billion
- Experts predict a slight decline in annual growth (-0.2%) from 2023 to 2028
How Much is My Moving Service Company Worth?
We recommend a market approach to determine how much your Moving service company is worth. A market approach involves the calculation of your EBITDA and SDE (along with other metrics), followed by the multiplication of rule of thumb data. You can see the rule of thumb data for the industry below:
- Advertising agencies sold between 2.16 and 3.91 times the Seller’s Discretionary Earnings (SDE)
- Advertising agencies sold between 2.73 and 9.85 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
- Advertising agencies sold between 0.57 and 0.73 times the annual net sales
Of course, adjustments are needed for the valuation of your moving service company based on non-financial factors. This may include but is not limited to your growth potential, unique competitive advantage, location, the quality of your workforce, and your reason for selling.
How Can I Sell My Moving Service Company for Fair Value?
It is important to remain organized through the sales journey. This ensures you sell for optimal value and in a timely manner. Below we discuss the various steps that should be involved in the sale of your Moving service company, which are:
- Market-based valuation
- Exit strategy planning
- Offers and negotiations
- LOI and due diligence
- Closing and business transfer
A market-based business valuation determines your worth on the market. In other words, it is the amount a fair and reasonable buyer is willing to pay to acquire your company. This is an important first step to take as it determines if now is the right time to sell your company and the amount you can get from a sale. This allows you to plan your exit strategy accordingly (see below).
Exit Strategy Planning
There are several steps you should take to plan your exit strategy and prepare for the sales process. Notably, these steps include:
- Put together your exit strategy team (i.e. broker, attorney, CPA)
- Determine your initial asking price (and willingness to negotiate)
- Establish your non-financial goals for the sale
- Gather your legal, financial, and operational documents
You may only need a business broker. However, it can also be beneficial to work with an attorney and CPA as well. Your team can help you set an asking price that allows you to receive fair offers. It is also best to prepare your company documents before you begin the sale process; this can save you time and effort later and reduce the risk of setbacks in the process.
For instance, some owners are adamant about not seller financing. In other cases, sellers are willing to negotiate terms for seller financing if it meets securing a better deal than they would otherwise receive. Of course, this is just one example of many possible non-financial goals.
Offers and Negotiations
Next, your broker will begin fielding offers for your company. This involves the utilization of private networks, databases, contacts, connections, and other channels. As offers arrive, the broker will screen them to ensure you only negotiate with qualified buyers who are able and willing to purchase your company. Ultimately, you will negotiate a deal with the buyer to which you would most like to sell. They will sign a letter of intent (see below) to secure the deal.
LOI and Due Diligence
A letter of intent (LOI) is a document that discusses the terms of a purchase. It is often used as a template for the purchase agreement that is drafted after due diligence is complete. Due diligence refers to the time the buyer has to review your Moving service company, allowing them to review and confirm financial data, visit your facilities, and more. This is an important step in the process as it gives the buyer a chance to feel comfortable moving forward with the purchase, and the seller can learn more about the buyer to ensure they are right to take over as owner.
Closing and Business Transfer
After due diligence, both sides can schedule a convenient time to close the sale. During closing, the buyer and the seller, along with each of their attorneys, review and sign the purchase agreement. Of course, the payment is also made. The payment could come via a release from the escrow the agent, or the buyer may pay directly via wire transfer or certified check. If there is financing in the deal, then a representative of the lender may attend closing as well.
After closing, the transition period begins. Of course, there are a range of tasks that may take place during closing. For instance, you may need to provide the buyer with full access to facilities, equipment, etc. This may involve providing them with keys and access codes. As it pertains to training the new owner, these details should have been worked out prior to closing and included in the purchase agreement. After training, the seller is able to move on to the next chapter of their life, whether it be starting a new company, retiring, or embarking on another venture.
Plan Your Exit Strategy With Sigma Mergers and Acquisitions
A successful business sale starts with an accurate business valuation. Here at Sigma Mergers and Acquisitions, we take pride in seeing the full value of your Moving company, looking beyond the financial numbers alone. If you would like a free, non-biased valuation of your company, contact us today.