Client
Plumbing Services Business
Background
The client’s business primarily services the new residential home industry, property developers, and builders. Their two main businesses were: (1) plumbing for new building fit-outs and (2) drainage works.
Challenge
The client wanted to sell and exit the business. They wanted to get out of the company. However, the client felt that there is no saleable business and that if they were to put it on the market, there would not be any buyers willing to buy it.
The client had a low view of what they thought the business was worth.
Action Plan
The team at Alexander Spencer examined the financial statements and operations of the business to determine its worth and provided feedback to the owner. The firm designed an 18-month action plan to increase the value of the business for sale. The team also mentored and guided the client throughout the process to keep them accountable for executing the action plan. The action plan involved two main parts.
- The first step is streamlining the business’s systems and processes to make the work done more efficiently and effectively.
This includes reconfiguring responsibilities to different people and removing the client from the operational processes and becoming more of a leader overseeing the business.
- The second action item was to build a pipeline of good-quality work with good margins.
This meant not taking on jobs that incurred losses to keep the team busy.
The plan took about 18 months to complete. The team helped the Plumbing Services Business build a profitable pipeline of work for the next 18 months.
“Buyers want to know what pipeline of jobs the company has quoted on and what the future estimated earnings are.”
The team also assisted the client in focusing on the pipeline of future projects to both maximise & ensure the future value of the business.
Results
The business has become very profitable and the team was able to help increase the value of the plumbing service business. They had good key staff and were in a situation where it was saleable and has a sustainable future. The client was confident that the company could run well even if they left.
Next Steps
Alexander Spencer referred the client to Edward Alder, Director at Lloyds Business Broker, who explained the M&A process.
The team provided all the necessary information to the prospective buyer that assessed the business operations, financials, profitability, what they are buying, and what they are not buying.
- The team kept the buyer fully engaged during the process.
- The team also ensured that the client continued to run his business profitably so that the pipeline grew during the sale process.
Plumbing Services Business’s profitability grew during the sale process.
Impact
The sale of the Plumbing Services Business allowed the client to do things for themselves and their family.
“Getting a monetary return for the business the client built and achieving what they wanted to do gave them even more fulfillment than what they would have gained from running the business.”
It allowed the client to gain the freedom to do what they wanted to do, which was to exit the business and pursue other ventures.
Services Provided
- Valuations
- Due Diligence Reporting
- Strategic Business Planning
Alexander Spencer helped the client increase the value of their plumbing service business and sell the business by partnering with Lloyds Business Brokers.
Alexander Spencer is a financial advisory firm that provides accounting and financial solutions, growing to become an AFR Top 100 Accounting Firm, providing quality business solutions and outstanding advice to all our clients. Alexander Spencer offers a wide-ranging selection of services, designed to meet all our clients’ financial needs. We believe in fostering success through playing an active role in developing and implementing business strategies for our clients.