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Those of us who have retired-

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Steamhead
Steamhead Member Posts: 16,950
how did you deal with the business end of it?

Did you sell the business, or shut it down?

Did you use a broker?

Was the process smooth, messy, or in-between?

@Gordo and I are looking at retiring in the next few years, and would like to hear your experience. Thanks in advance.
All Steamed Up, Inc.
Towson, MD, USA
Steam, Vapor & Hot-Water Heating Specialists
Oil & Gas Burner Service
Consulting
Alan (California Radiant) Forbeskcopp

Comments

  • Larry Weingarten
    Larry Weingarten Member Posts: 3,364
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    Hi @Steamhead , Chris is right, The Wall says stay!

    So, do you have employees you could sell the business to? The value of your business is in two places... your client list, and what's in your heads. Whoever takes over needs both things. Can you stick around for some number of years in an advisory capacity, so the new owner is adequately educated? If so, the business easily has a sales value. Even if just closing it down, you want to be able to give your clients someone reliable to go to.
    I suppose a broker could be useful if selling to an existing business that wants to expand, bu then you could put together a letter or make phone calls to good steam contractors in your area yourself. I just closed my business name down as I couldn't find anyone who could seem to retain everything they needed to know to serve the clients well, but I still go on calls for people who really need help.
    Then there is the question of valuing the business. That's not hard for equipment, but the client list and good will are hard things to put a price on.
    You will of course keep coming to The Wall to help us and keep us on our toes?! I can just heat The Wall saying, "This" B)

    Yours, Larry
    Alan (California Radiant) Forbes
  • hot_rod
    hot_rod Member Posts: 22,394
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    It’s tough to put a value on your customers and phone number. If you go out of business those customers will find someone else, so it is hard to sell a customer list. YP ads had some value, moving your phone number to another shop for example.

    when I sold as a one man company the phone number and jobs in progress is how it was valued. 

    A buyer would want to see how many calls come in, how much money the company makes, etc. Solid financials helps a lot when trying to sell

    Tools and equipment are generally pennies  on the dollar

    The knowledge that you and Gordo have are worth the most to a buyer. Consult or train for a new buyer is the biggest win. You get paid and benefits, oart time for a pre determined period so you can put some $$ numbers to it.
    Bob "hot rod" Rohr
    trainer for Caleffi NA
    Living the hydronic dream
  • Alan (California Radiant) Forbes
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    Timing is everything. Catching the eye of a qualified buyer who's in the right mood to spend good money to buy an established business is a crap shoot. How, where and when do you position yourself?

    Should you go after someone new to the business who knows nothing about steam, but wants in? Or to a competitor that wants your customer list? Maybe someone in Washington, D.C. wants a presence in Baltimore.

    Maybe start by letting your suppliers know that you're thinking about retiring. News travels fast and seeing as though we're heading into a recession, the smart contractors will want to develop the service and repair part of their business.

    And how to value the sales price? Low six figures sounds like a lot, but 20 boiler replacements will pay for it.
    8.33 lbs./gal. x 60 min./hr. x 20°ΔT = 10,000 BTU's/hour

    Two btu per sq ft for degree difference for a slab
  • EdTheHeaterMan
    EdTheHeaterMan Member Posts: 8,157
    edited September 2022
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    I had a special business. I did not sell oil but I was the go to man for oil burner service. I had over 500 service contract customers monthly automatic pay. Over 40% of those service agreements were on oil heaters. Four different fuel oil dealers recommended to their customers call me directly and one oil dealer took the call and then dispatched it to me. I was also recommended by other plumbers and HVAC contractors to do Oil Heat repairs that they did not want to handle.

    That left me in a position that had no local competitor who was interested in my business. As I was diagnosed with a slowly progressing crippling disease, I was lucky to find out that a local plumber/HVAC contractor that also sold oil and did oil burner service, decided one day to stop selling oil. He just stopped the oil delivery service, parked the 2 trucks and stopped.

    By that time My business was made up of two office staff and three service/installer personnel putting in heaters and air conditioners and servicing the maintenance agreements. My son was not interested in taking over the responsibility of the day to day business, hiring more mechanics and the like, so I approached the owner of the recently closed fuel dealer at a supply house. Since he did oil heat, air conditioning and had no reason to poach oil heat customers from my customer list, he was the perfect candidate for purchasing my service agreements.

    We made a deal and I worked for him for a year. My son left the trade to become a welder for an Awning Manufacturer/Installer. I tell everyone he is a Permanent member of the Temporary Structure Industry.

    I just got lucky

    You need to have something to sell. something more than a phone number and an hourly rate. My service contracts were the reason I was able to sell the business for as much as I did. The purchaser was interested in upgrading his Service Agreement Business and wanted me to teach his sales staff, service technicians and the office staff the system I used to get so many people to purchase service agreements. 500 may not be a lot, but it was growing after I implemented a system of incentives for the technicians to promote service agreements. One of the techs just left for a management position with a larger competitor and I was going to replace him and hire another because of the growing service agreement base. When I got my diagnosis, That took the wind out of my sails and my the wind out of my Sales. without my son interested in growing it, I looked for a buyer.

    Edward Young Retired

    After you make that expensive repair and you still have the same problem, What will you check next?

    PC7060
  • EBEBRATT-Ed
    EBEBRATT-Ed Member Posts: 15,767
    edited September 2022
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    Maybe you can find a young plumber that you can afford to bring in and train. He could work for you for a year or so if he looks like the right guy he could buy you out and you could work 2 days a week for him for a couple of years to nudge him along.

    I don't know if making this too public with your suppliers might cost you some business, Maybe @Dan Foley will expand into Baltimore
  • Steamhead
    Steamhead Member Posts: 16,950
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    ChrisJ said:

    We have received your request to retire and we regret to inform you but it has been denied at this time.

    Please check back in 10 years.

    Kind regards,
    The Wall.

    :D:D:D
    All Steamed Up, Inc.
    Towson, MD, USA
    Steam, Vapor & Hot-Water Heating Specialists
    Oil & Gas Burner Service
    Consulting
  • PC7060
    PC7060 Member Posts: 1,211
    edited September 2022
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    @EdTheHeaterMan - When I hear someone has been lucky, I remember something I was told many years ago, “luck finds the well prepared!”


    EdTheHeaterMan
  • hot_rod
    hot_rod Member Posts: 22,394
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    I’ve heard my wife tell new contractors to build their company from fast one as if they are going to sell it some day

    While many dislike service contracts, it adds a lot of value to a sale, as @EdTheHeaterMan
    mentioned. It’s income for a buyer from day one. 

    Showing on paper that you paid yourself helps also.
    Bob "hot rod" Rohr
    trainer for Caleffi NA
    Living the hydronic dream
    EdTheHeaterMan
  • EdTheHeaterMan
    EdTheHeaterMan Member Posts: 8,157
    edited September 2022
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    Before I was Diagnosed, I was interested in growing my business and there was a local competitor that wanted to sell. He has a proposal that was prepared by a broker. The broker did a nice job of showing the valve if the inventory, Equipment, Rolling stock, Service agreement income and the like. Since the broker was unable to get buyer, and I knew him socially from the local Elks Lodge, We discussed my purchasing his business. It was about an equal size to mine with over 1000 service agreement. He was using some Business success group of some kind that teaches you to grow your business thru service agreements and flat rate pricing. My cousin was in the acquisitions department of a larger multi State/location competitor, so I asked him to help in the purchase of the business.

    A few weeks of research and we decided to purchase the competitor's business. He had lots of heat pumps and Gas heat w/AC in condo and apartment complexes under service agreements.

    Funny Story... I agreed to purchase his business for the asking price. He then said "Wait a minute... I have new inventory of $70.000.00 and I want to add that to the top of the asking price." I showed him that the broker had his inventory from the previous year was $100,000.00 so I would be lowering my offer by $30,000.00. He said he would look elsewhere. A year later he approached me to see if the offer was still good. By that time I was Diagnosed with this incurable neuropathy in my legs. So I said NO the offer was no longer available.

    Got Lucky again!

    Edward Young Retired

    After you make that expensive repair and you still have the same problem, What will you check next?

    PC7060
  • Rich_L
    Rich_L Member Posts: 81
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    The company I just retired from is in the long term process of selling out to an employee. The owner is in his early 50's but in considering the future and long term, made an agreement with a current employee to buy him out. This is going to happen over 5+ years. The purchaser took an office - Service Manager - position several years ago and is dealing with more and more of the daily business needs, side by side with the owner. The owner is still around, though not every day, to advise. The buyer received a nice raise, both in pay AND responsibility, when the agreement was drawn up. A large portion of the raise is going to the owner as payment for the business. This arrangement seems to be working out very well for both parties and the business is thriving.

    Note: we are a commercial - industrial mechanical contractor with approx. 55 employees in the field- pipefitters, plumbers, and service techs as well as several project managers and office support staff. They have some very long working agreements with some big companies and organizations in our area. Great company and I'm honored to have worked for them.

    Note 2: When I "retired" the end of June this year they offered me to stay on part time, since I was planning on doing something part time anyway. They've kept me with an older company truck (no complaints!) and phone and I primarily just go on calls with less experienced HVAC/R techs that need some guidance. A few hours here and a day or two there and if I'm traveling for a week or two, they're fine with that. So far, it's been a great set-up for us both.
    EdTheHeaterManAlan (California Radiant) Forbes
  • unclejohn
    unclejohn Member Posts: 1,833
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    AS said above written contracts are where the sale is made. When I became a one man shop I got rid of written contracts because many of my customers thought I was their employee and they would tell me when I would perform services because they had a " contract" so I got rid of all of written ones. Just call and Ill come by. But when it came time to sell everyone wanted to know one thing, how many contracts do you have.
  • Dave Stroman
    Dave Stroman Member Posts: 766
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    Retire? Maybe the day after I die....

    There was an error rendering this rich post.

    EdTheHeaterManMikeAmannAlan (California Radiant) ForbesLarry Weingarten
  • HEATSPEC
    HEATSPEC Member Posts: 9
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    For years, I thot I was going to die in the harness. But now that I didn't, [and indeed, it would penalize me to continue working] I've found two things:
    1. If you're REALLY imaginative, there are all sorts of post-career careers awaiting you - AND you don't have to worry about making a profit! Teach, lecture, pass yer knowledge on to the Gen X/Y/Z/Millenials, become a genealogist, horticulturist, expert on Slavonic folk music or whatever.... you get the idea. [ESPECIALLY that passing on your knowledge part].
    2. I'm amazed at the number of fellow retirees [still HATE that word] who claim they're busier THAN EVER now that they've retired; maybe it's the backlog of stuff you put off during yer work career catching up with you, or maybe it's the dreary prospect of a future life based entirely on living from doctor's appointment to doctor's appointment.
    Whatever. Since my Soulmate departed this planet, I realize that imparting the proper LEGACY for mine, her, and other physical and spiritual possessions is a goal in life I probably wouldn't have time to do properly were I still in the harness, so to speak.
    But that's OK; I've led a GREAT and interesting life, and any good times in the future will just be gravy. - John
    Alan (California Radiant) ForbesEdTheHeaterManLarry Weingarten
  • HomerJSmith
    HomerJSmith Member Posts: 2,483
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    Don't get rid of your tools. I predict you'll be back at work in no time.
  • Tinman
    Tinman Member Posts: 2,808
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    Retire? Maybe the day after I die....
    You don’t always get to choose. 🤷‍♂️
    Steve Minnich