As an owner, you take a significant amount of pride in your OOH business – and you should! But don’t let this cloud your decision-making process when it comes time to consider selling your company’s assets.
Remember: value is in the eye of the beholder (or in this case, the buyer).
What do buyers look for? Growth. They want to catch companies at the ideal moment of the business lifecycle. Assuming you can demonstrate a sustained pattern of growth, the next steps in determining readiness are to research the economy and take full inventory of your business.
- Local Economy: Is the demand there? Is your city growing? What is the state of small and big business in your metro area? These are all questions that are imperative to ask when thinking about selling your OOH business.
- Market Conditions: Market conditions are important as they show how the economy is doing and what the forecast looks like. The ideal time to sell is when your business has been growing steadily alongside the economy and the market is forecasted for continued growth.
- Industry Trends: The current state of the OHH industry is also a critical factor in preparing to sell. Research sale trends and discuss recent cash flow sale multiples with trusted brokers. Generally speaking, higher sale multiples translate to more interested buyers who are bullish on the OOH industry.
If the economy and market conditions are favorable, it’s time to look internally to determine if your OOH business is ready to be sold. As previously mentioned, the best time to sell your business is when it’s doing well. While it can be tough to walk away when your business is doing so well, that’s the exact time to maximize a sale.
- Financial Incline: The value of your business and sales price will likely be determined by a multiple of trailing billboard cash flow (revenue less direct expenses). Therefore, when your business is on a financial incline, your ultimate sales price will be higher. If you have been watching your numbers grow over the past three years, it’s time to get a valuation done to have a realistic sense of what your plant is likely to sell for.
- Strong Staff: Building a rock-solid team doesn’t happen overnight. Having a strong team in place can have a significant impact with certain buyers, such as new private equity backed buyers making their initial investment into the industry. Your staff can be a major selling point during the marketing phase and if you currently have a strong team that operates your business like a well-oiled machine, the business is ready for the sales process.
- No Impending Capital Expenditures: Capital expenditures are a normal part of owning a business, however, you’ll want to get these out of the way if you envision a sale on the horizon. Think about it. No buyer wants to walk into thousands of dollars in expenses on Day 1. Knock these expenses out prior to the sale for the best price.
When you decide to get your OOH business valued in order to prepare for the sale, timing is everything. Understanding the key predictors in planning for the sale is good knowledge to have so that you can make the right decision for you and your business.
Still on the fence about selling your OOH business?
Stark Capital Solutions is always available for free consultations. We’re down-to-earth, trusted advisors with the professionalism, experience and connections you need to get your billboard company sold. Contact us today to set up your appointment.