Every industry has its nuances, consequently business sales transactions for specialized industries have unique aspects such as licensing, inventory, Work in Progress, government contracts and ongoing or long term contracts. Businesses such as Healthcare and Contractors that have state and/or Federal Licensing require a Business Broker with experience in these transactions and understands the licensing requirements of the respective business and/or industry. Business valuations also vary by industry as each industry has different earnings multiples and valuations must take inventory, WIP, A/R and other variables into consideration.
Pacific Business Sales has the business transaction experience in specialized industries and we are familiar with the unique requirements for each industry. For example, in some industries a Stock Sale is often a requirement to preserve a company license such as a Contractor’s License or Healthcare License. In manufacturing, distribution and contracting businesses Inventory, Work in Progress and A/R values change weekly and very specific language is required in the Purchase Agreement to deal with this.
SBA financing is also different for each specialized industry. For example some banks do not offer SBA financing for Construction and/or Contractor businesses, however, from our many years of experience in selling these businesses we have built relationships with SBA lenders that offer excellent SBA financing terms for construction and/or contractor businesses. We work exclusively with Preferred Lending Program (PLP) SBA lenders and use the best lender suited for each transaction.
Manufacturing companies are in very high demand with buyers and these companies sell at a premium in comparison to other industries.
Manufacturing companies have unique requirements in a business sale because there is inventory and Work in Progress that must be valued as part of the business value. Some manufacturers have government contracts or long term contracts that require special handling in the transaction and transition. When companies have government contracts a Stock Sale is often required to preserve those contacts after the transaction closes and ownership changes.
Technology companies such as SaaS providers as well as software and hardware companies are favorites with buyers and do very well on the market. With that said, these companies are often too complex for many buyers that inquire. It is imperative that a prospective buyer for a technology company understands the technology itself as well as the market the company sells into. It is equally important that the Business Broker representing your technology company understands your products and market. Bill Grunau, President/Broker of Pacific Business Sales, has a BSEE and an extensive background in technology companies including semiconductor software, semiconductors, Military Electronics, Industrial Computers, and Control Systems.
Construction companies and contractors have special transaction requirements because they have a Contractor’s License and some have long term contracts. In many construction/contractor sales we recommend a Stock Sale instead of an Asset Sale which is used in most transactions
Rarely will a buyer have the necessary Contractor’s License, consequently, most construction or contractor business sales will require the Seller to act as the RMO (Responsible Managing Officer) for the buyer for up to one year. We have experience in selling construction companies, dealing with the licensing issues and bank approvals for SBA financing.
E-Commerce companies are in high demand with buyers and are selling at premiums as compared to brick and mortar and conventional businesses. In many ways e-commerce companies are easier to run than other businesses because of the automation and software systems and this perception has buyers eager to acquire one. While software automates many of the basic operational tasks, these companies require an owner and buyer that understand the company’s market, digital marketing, ecommerce systems, and the supply chain. A vital aspect of selling an ecommerce company is ensuring the buyer is capable of closing the transaction and of equal importance that they can successfully run the business.
Healthcare companies have very specific and in some cases extensive licensing requirements. While healthcare companies are in high demand by buyers, not all buyers are qualified to acquire and run a healthcare company. We have dealt with both medical and non-medical homecare businesses as well as professional practices and we are familiar with the licensing requirements for these businesses. Transactions for Healthcare companies are different from that of ordinary business sales.
Distribution businesses have been very popular with buyers for many years. They are perceived as being lower risk and easier to run than businesses such as say construction or technology. One challenge with Distribution companies is often inventory value. Extremely high inventory values will drive the purchase price higher and reduces the ROI for the buyer as well as increasing the debt service and down payment with SBA financing. Pacific Business Sales has experience selling distribution companies with SBA financing and we know how to value the company and structure the transaction to ensure it will sell and close.
Business to Business (B2B) Services are also popular and in demand from buyers. These businesses are also seen as being straightforward to run with minimal risk and good stability. While these transactions are less complex than say healthcare or construction, the key concern for the seller is to engage a business broker that will manage the transaction from beginning to end, ensuring a smooth and timely closing.