Selling Your WCO Business Part 2
This article is part of a 5-part series. These blogs were originally published as “Selling Your Company” Wildlife Control Technology Magazine Sept/Oct 1999. Disclaimer: Article for informational purposes and is not to replace good legal counsel.
There are various ways to value or put a price tag on your business. One method relies on gross revenues. Generally this technique relies on a multiple of the gross revenue. Some businesses sell for two times gross revenues. Others sell for three times gross revenue. I know of another company that sold for 1/10 of gross revenues plus the cost of equipment. Another way to value a business is by a multiple of the value of annual contracts. Contracts represent reliable revenues that will come to the company. Certainly these could be sold for a premium. Of course, another method is what are other businesses of comparable size and revenue selling for?
Once you have a figure in mind, you need to list the company’s assets. Take a thorough inventory of the company. List all the traps, baits, tools, office supplies that will be included in the price. You should also list phone numbers, pager numbers, logos, advertising proofs, corporate forms and other intangible assets that will be included in the sale. Be thorough and complete as possible. Make sure you list what you won’t be selling. For example, when I sold my business, I made sure that certain pieces of office equipment were not part of the sale.
The next item you should have available is a profit loss statement that covers the previous three years. You will be showing this to potential buyers. They will want to see that the company is making money and that it is growing. Never provide a copy of your client list to a potential buyer, unless they sign a non-disclosure agreement for at least 6 months. An alternative way is to let them only view the list without allowing them to have a copy. When they sign on the dotted line then you can give them a copy. The reason for this caution should be obvious. You should also get copies of your tax returns for the last three years. You should only copy those portions of your returns related to your business, such as a schedule C, if you are not incorporated, or your corporate returns if you are.
Although the brunt of many jokes, a lawyer who works for you will be a necessary part of the process. Make sure your lawyer knows the laws of your state. You don’t want to waste time and money paying money to a lawyer that isn’t up to speed. Be prepared for a lot of negative words from your lawyer. Lawyers do break deals and then tell you how they protected you from being taken. Evaluate their advice. They work for you, not vice versa. I must say that a lawyer protected me from one sale. It turned out the seller wanted me to sign documents that were not interlocking. This meant that the buyer could default on paying me but I would still bound by a non-compete agreement. Make sure you make a sale agreement that is interlocking. If the purchaser fails to his part of the bargain, your obligations are also removed.
About the Author
Stephen M. Vantassel is a Certified Wildlife Control Operator (CWCP®) who helps individuals, businesses, and agencies resolve wildlife damage issues through training, writing, expert witness, and research. His latest books are the Wildlife Damage Inspection Handbook, 3rd edition and The Practical Guide to the Control of Feral Cats. He can be contacted at wildlifecontrolconsultant at gmail dot com.
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