Usually earlier than owners think, and almost always before they're burned out. The best time to sell is when the business is doing well, the work is steady and you're not desperate to get out, because that's when buyers will pay the most and you get to choose the deal.
Most owners do the opposite. They work until they're tired, or hurt, or the business starts sliding, and then they try to sell in a hurry. Buyers can tell, and they price it in.
Why do so many owners wait too long?
Because selling feels like something you do at the very end. A lot of trade owners plan to work until they can't, and then figure they'll sell to a competitor or hand the keys to someone on the crew. Then the day comes, and the business is worth a lot less than they hoped, because it was built around them and they're the part that's leaving.
What makes a good time to sell?
A few things lining up at once:
- The numbers are strong and steady, ideally for a few years in a row, not one great year.
- The business doesn't need you every day, so a buyer isn't nervous about you leaving.
- You're not in a rush. Selling usually takes months, and having time means you can say no to a bad offer.
- There are buyers looking. Right now a lot of buyers are interested in trades like HVAC, plumbing and electrical, because people always need them.
Why you should start thinking about it now
Even if selling is ten years away, the things that make a business sell well take years to build. Owners who know where they're headed make different choices along the way, like hiring the office help, writing down how jobs run and building a steady stream of customers that doesn't depend on them.
One thing to try this week
Pick a rough year.
- Think about the year you'd like to be done running the business day to day.
- Count how many years that leaves you.
- Ask whether the business, as it runs today, would be ready to sell by then.
If you had to sell in three years, would you be ready?
Common questions
- When is the best time to sell a contractor business?
- When the numbers are strong and steady, the business doesn't need you every day, and you're not in a rush to get out.
- How long does it take to sell a trade business?
- Usually months once you start, and the work that raises the price takes a few years, so it pays to plan early.
- Who buys plumbing, HVAC and electrical businesses?
- Competitors, people already in the business like a key employee, and investors who buy businesses in the trades.