How to Sell a Sunroom and Awning Installation Company

Sunroom and awning installation company owners are in a unique position as they are positioned within an industry with excellent growth numbers and projections. This leads to a пreat time for owners who are ready to retire or transition into a new professional venture to sell for great value. In this review, we discuss the valuation and sale process for sunroom and awning installation companies. 

About The Sunroom and Awning Installation Industry

A sunroom and awning installation company engages in the manufacturing of sunroom and awning materials as well as design and installation services. There has been significant demand for sunroom and awning additions to existing (and new construction) homes across the United States. 

Established companies within the industry usually have as much or more demand than they can handle, and many even have waiting lists for their services. The industry, which has significantly increased in size, shows excellent growth projections as well. This all leads to excellent valuations for company owners who are planning their exit strategy. 

How to Value a Sunroom and Awning Installation Company

Determining the value of your company is the first step to any business sale. This tells you if you can receive the sale price that you desire or if you should work to improve your value before you go to market. Specifically, we recommend a market approach. This involves the application of your EBITDA, SDE, and annual net sales to the following rule of thumb data: 

• Sunroom and awning installation companies sold between 3.60 and 4.58 times the Seller’s Discretionary Earnings (SDE)
• Sunroom and awning installation companies sold between 5.56 and 6.57 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
• Sunroom and awning installation companies sold between 0.54 and 1.04 times the annual net sales

A Six-Step Guide to Selling Your Sunroom and Awning Installation Company

We recommend breaking down the sales process into the following six steps. Of course, there is a range of actions you will need to take within each step, which is discussed in the descriptions below. We strongly recommend working with a business broker to ensure a successful and stress-free sales experience. 

1. Plan and prepare
2. Offers
3. Negotiations
4. Due diligence
5. Closing
6. Transfer

Plan and Prepare

You can prepare for the sale after you determine your company’s valuation (see above) and plan your exit strategy goals and long-term vision. You will need to arrange your list of inventory. This includes all of your sunroom and awning equipment. Your list of assets included in the sale should also be arranged. For instance, if you own a welding machine, then this would be added to your list of assets. 

Of course, you should also collect all of your financial documents, such as your tax returns, profit and loss (P&L) statements, and balance sheets. In most cases, you will need the past three years worth of financial documents. Lastly, you will need to arrange legal documents. For example, if your sunroom and awning installation company has a patent on a certain type of awning design, then you will need to arrange the patent document to present to potential buyers during offers, negotiations, and due diligence. 

Offers

Your business broker can seek buyers for your sunroom and awning installation company by leveraging private databases, networks, and various other channels. Keep in mind, fielding offers must be done in a confidential manner. Otherwise, news of your company sale would leak and may cause issues with business processes and operations. As offers arise, your broker can screen them and begin negotiations (see below).

Negotiations

Potential buyers will try to acquire your company for the lowest sale price (and for the most favorable conditions possible). Therefore, the accepted offer may look much different than the initial offer. Your broker can help you secure the best deal possible and lock in the deal with a signed letter of intent (LOI). This stage also includes contingency planning. For instance, a buyer may make an offer that is contingent upon them receiving financing.

Due Diligence

Once you have accepted an offer, the buyer needs an opportunity to review and investigate your company. This helps them feel more secure with their purchase and plan the initial steps they will need to take once they take over business operations. During due diligence, the buyer may request:

• Company documents, including financial, legal, and operational information
• Answers to questions they still have about the company and its operations
• A walk-through of your manufacturing and storage facilities (along with any additional facilities you may have)
• Meetings with important company employees and/or your top clients, especially if a large percentage of sales comes from a particular client
• Meetings with all of your suppliers
• Meetings with business partners, investors, stockholders, etc.

Closing

The closing date is either scheduled during negotiations or after due diligence. During due diligence, you will review and sign the purchase agreement. The buyer then completes the payment and you confirm that you have received the funds. From there, you will begin the company transfer and training processes.

Transfer

This begins during closing in most cases. Specifically, it may involve updating all insurance policies, utility accounts, business names, etc. The transfer also involves providing the new owner with access to all facilities, inventory, etc., along with introducing them to employees, suppliers, and long-term customers. 

From there, you can begin training as it has been established during negotiations and due diligence. This may involve limited assistance such as over the phone consulting or more involvement such as you remaining on-staff for an indefinite period of time. 

Are You Ready to Sell Your Sunroom and Awning Installation Company?

You have spent years building your company into what it is today. The next step is to sell and move to life’s next chapter. Sigma Mergers and Acquisitions can help secure a fair sale price in a company sale. Contact us today to learn more about the process and how we can assist you. We can also provide a free, no-obligation valuation as well.