Ready to sell your staffing agency? Here are a few tips to prepare for a sale.
With markets settling down after the disruptions brought on by the pandemic, now may be the best time to sell your staffing agency and put your exit strategy into motion. There’s a strong demand for existing staffing companies now and in the future. However, the sale of a staffing company can be one of the most challenging endeavors of your career as a business owner.
It takes thorough preparation and planning to make your business more attractive to buyers and lock in a successful sales transaction. Here’s how you can prepare your staffing business for sale:
Determine Your Goals and Objectives
Selling your staffing business without a clear vision of exactly what you want to achieve is a recipe for disappointment. Spend time with a business broker to highlight your goals and objectives and identify areas for improvement.
If you have to add more financial resources, be sure to define how much you need to net from the transaction. Identify other qualitative factors, like taking care of your team or ensuring a legacy for your business, and then prioritize them based on their level of importance.
Get a Business Valuation
Before you begin fielding offers for your staffing business, you’ll want to know how much your agency will fetch. A professional valuation will give you an idea of your company’s worth as well as its financial situation, market position, strengths, and weaknesses.
Get Your Books and Paperwork in Order
Financial records allow potential buyers to assess your agency’s financial performance and growth potential. Prospective buyers will generally require at least three years’ worth of financial records before they can make an offer. So, you want to make sure your books and paperwork are organized, accurate, and up-to-date.
Prepare monthly/quarterly financial statements, A/R status, financial models, sales pipeline, and tax returns. The more formal and detailed your company’s financial statements are, the easier it is for potential buyers to review them.
Collect Your Diligence Materials
As you prepare your staffing agency for sale, review your incorporation papers, insurance policies, contracts, benefits plans, licensing agreements, leases, litigation summaries, intellectual property documentation, and more. Make sure your diligence materials are current, organized, and readily available before you start fielding offers.
Diversify Your Customer Base
Customer concentration can lower the value of your staffing agency or eliminate the possibility of a transaction altogether. While it’s difficult to avoid pursuing a large customer or industry, you should also invest effort in broadening your business and building diversified revenue resources.
You also want to avoid too much permanent placement because it could have a big impact on valuation. Contract staffing is considered a consistent and recurring revenue stream and is preferred over the occasional cash burst that comes with permanent hires.
Consider Management Succession
Can your staffing company continue to operate smoothly and profitably after you leave? This is a big consideration for buyers. If the past and future success of your staffing company hinges on your constant presence and involvement, a buyer might reasonably feel it will take too much time and effort to assume the helm and oversee business operations.
Having a management succession plan before going to market can help you maintain the value of your staffing agency. You may identify and mentor someone in your management team to take over after you’re gone. Promoting from within also helps your business maintain relationships with employees, customers, and vendors.
Motivate Your Team
As you build a strong employee base, look for ways to motivate them. This may include establishing clear objectives or offering attainable rewards. Work with your HR department to develop a strong sales team.
Work with a Business Broker
There’s a lot riding on the sale of your staffing company, and going it alone can leave you feeling frustrated and overwhelmed. Given the high-stakes nature of M&A transactions, there’s no room for small missteps. Preparing your staffing business for sale involved two primary things:
- Growing your agency in a way that maximizes sales and profits
- Positioning your agency in the best light for buyers
A savvy business broker can guide you through the entire sales process, showing you the best ways to prepare your staffing business for sale. A broker will use metrics to evaluate your business and determine a reasonable price for it. They will also analyze the recent sales of staffing companies in your area and use that information in the pricing decision. Importantly, a business broker will help you find buyers, introduce them to your business, and negotiate a final sale price.
Lonnie Veasley Can Help Prepare Your Staffing Business for Sale
Getting your staffing agency ready for sale? Lonnie Veasley can help you tie up loose ends and get your business in shape so you can get the price that you deserve. Lonnie has served hundreds of business owners in Clearwater and Tampa Bay and can help pave the way long before your business goes on the market.
