Have you considered selling an airport operations company? As flight traffic returns to normal following the pandemic, airport operations companies are receiving higher valuations. This means that now may be the best time for you to sell. This detailed review from a business broker highlights the sale process for airport operations companies and provides insights into how to determine the worth of your company.
About The Airport Operations Industry
The airport operations industry is complex. It is also a relatively broad industry that encompasses several different business types, from baggage and cargo handling services to offering airplane hangar rental spaces. Overall, airport operations describe the practice of supporting international, national, or civil airports. Here are the numbers for the airport operations industry:
- There are approximately 2,300 airport operations companies in the U.S.
- There was a 3.0% increase in annual sales for the airport operations industry from 2018 to 2023
- The ambulance service industry generates $11.8 billion in annual revenue
- The airport operations industry lost profit overall ($-718.4 million)
- Experts predict a sizable increase in annual growth (1.7%) from 2023 to 2028
The airport operations industry has a high barrier to entry. This limits competition and increases value for established companies within the industry. The margins are also good for companies that have a client base of high-net-worth individuals (which is common within the industry).
Determining The Value of Your Airport Operations Company
Your financial information is the driving force behind your business valuation. Specifically, your seller’s discretionary earnings (SDE), earnings before interest, taxes, depreciation, and amortization (EBITDA), and net sales are vital metrics. This information is used along with acquisition multiples within the industry to determine a general value. The acquisition multiples for the airport operations industry are:
- Airport operations companies sold for approximately 2.78 times the Seller’s Discretionary Earnings (SDE)
- Airport operations companies sold for approximately 0.50 times the annual net sales
- Airport operations companies sold between 4.21 and 4.92 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
Financial data is important, but it is not the end all be all. Other important factors that influence your business valuation include the diversity of your profits (how many clients you have), your growth potential, and your reason for selling (among other considerations).
Preparing for The Sale of Your Airport Operations Company
First and foremost, you will need to prepare your financial and legal documents. This includes your profit and loss statements, tax returns, insurance policies, contracts with existing airports (and other clients), and more. Your business broker may also advise you to develop a sales memorandum (and assist you with its development). This memo provides an overview of your airport operations company and lets prospective buyers quickly gain important information. You may also need to address any possible liabilities that impact your valuation or ability to sell for fair market value.
Confidentially Finding a Buyer for Your Company
Confidentiality is of the utmost importance when selling your airport operations company. This helps ensure no harm if you choose not to sell or a deal falls through. It also helps maintain daily operations and reduces the risk of clients catching wind of your sale and possibly ending your service.
As it pertains to finding a buyer, this is where your business broker helps. They use their connections, networks, and database to find qualified buyers. They also understand how to effectively pre-screen buyers that may not be an ideal fit. Your broker also handles negotiations, contingency discussions, and more. If necessary, they may also coordinate meetings between you and potential buyers. Ultimately, they narrow down the list of qualified candidates and help you choose the best one based on your goals.
You should also check: How to Sell a Barbershop
Negotiations and Signing of The Letter of Intent (LOI)
Negotiations are one of the most challenging stages of the sales process, particularly for airport operations companies that do not have a business broker in their concern. With a business broker, however, you can trust that the negotiations are handled professionally. Even more importantly, the broker works hard to secure you the best deal possible. Your lawyer can draft the letter of intent for you (or assist you with the process). They can also connect with the buyer and review the LOI before it is signed. Once the buyer signs, you can move to the due diligence process of the sale.
The Due Diligence Process
Due diligence offers an opportunity for the buyer to confirm details about the business before they purchase. This should be structured and conducted in a timely and organized fashion. Examples of the types of documents that the seller may request include (but are not limited to):
- Ownership documents
- Business licenses
- Tax returns
- Internal profit / loss statements
- Current and past contract history
- Insurance and lease policies
Other types of financial, legal, and operational documentation may be necessary, depending on the specifics of your company and the sale situation. A review of your existing staff may be a part of the process. In rare cases for airport operations, an on-site visit is scheduled. If any issues arise during due diligence, then your business broker, attorney, and CPA can assist you with resolving them as quickly as possible.
Closing The Sale and Transferring The Business
It is now time to close the sale by finalizing the purchase agreement. This may involve acquiring the necessary permits and approvals; this could involve certain transfers. You may also need to coordinate the transfer of your assets, notify employees, and assist with continuing client relationships during this stage. At the closing table, you will attain the final signatures, and the payment for the business is sent to you and confirmed. Once the sale is closed and the business is transferred, you are free to start your next journey in life.
Sigma Mergers Offers Business Brokerage and Consultancy Services
Before you sell your airport operations company, you need to determine its value. Not every company should go to the market right away, and we can help you plan to maximize your value and plan your sales plan and timeline. To learn more and get started with a free business valuation, schedule a consultation with our business brokerage team today.
Scot Cockroft is the Owner & President of the #1 ranked Business Brokerage, Business sales and M&A firm in Texas. Scot has been named Named Deal Maker of the Year by Dallas Business Journal.
He is committed to a “different” type of business brokerage firm, one that is NOT about a sales pitch but, rather, results! In short, a business brokerage firm that is committed to performance-based compensation. Scot believes in these principles as well as a candid honesty with clients. His candid style often takes buyers and sellers by surprise, but is often what assures successful connections between the two.
Feel free to reach out!