How to Sell an Engineering Business

How to Sell an Engineering Business 2019-11-05T10:59:58+00:00

You’ve worked hard to build a thriving engineering business – and now you’re ready to sell. However, just because you’ve had success as an entrepreneur doesn’t mean you possess an innate understanding of how to sell an engineering company.

Engineering business sales are fairly complex transactions, requiring significant preparation and market analysis. Fail to do your due diligence, and your sale can drag on for years, or you may have to settle for a lower price than expected.

Working with an experienced CT business broker firm like VR New Haven can help ensure that your sale is successful. We have a distinguished track record of helping engineering business owners complete timely transactions on favorable terms.

Let’s take a closer look at some key steps to take when selling an engineering business.

Engineering Business Sales

Selling an engineering business entails several challenges that are unique to the industry. For example, most buyers typically must be licensed professional engineers, which narrows the purchaser pool significantly. However, an exception can be made if a buyer has an existing engineering division within its overall corporate structure. Knowing industry-specific rules, regulations, and challenges is an essential part of successful sale planning.

Sellers should also take the following key steps:

  • Write a Business Summary – When business owners decide to sell, they typically want the process completed in a timely manner. However, sales can sometimes drag on for a year or more if sellers don’t take the appropriate actions. One of the first steps to take is to create a 10 to 20-page business summary that outlines all the relevant information a likely buyer needs to know. By creating this document upfront, sellers can weed out unreliable buyers. A comprehensive summary should provide a buyer with everything they need to determine if the transaction is a good fit.
  • Contact an Experienced Business Broker Who Specializes in Engineering Company Sales – There are unique challenges associated with engineering business sales. Additionally, post-sale transitions and integrations within the engineering sector can also present difficulties. At VR New Haven, we have the necessary expertise to help guide these changeovers effectively. We are fully committed to both the sale and the transition, no matter how long they take.
  • Have Your Business Broker Develop an Accurate Valuation – Most engineering business owners lack the experience and market knowledge to develop an optimal valuation. In order to arrive at a number that will interest buyers without leaving money on the table, it’s necessary to understand local market dynamics and have insight into industry comparables. Assets, liabilities, and other basic financial metrics only tell part of the story. If you want an optimal valuation, it’s better to work with an expert in the field – a company that performs assessments on a routine basis.
  • Use a Business Broker to Help You Find Interested Buyers – Given that you’re limited to buyers who are licensed engineers or who manage an engineering division, finding qualified candidates can be quite difficult without outside assistance. That’s why it’s beneficial to work with a business broker who maintains a list of prospective buyers. A leading business broker, such as VR New Haven, goes a step further; we have a comprehensive understanding of all niches within the engineering industry. This includes mechanical engineering companies, environmental engineering businesses, civil engineering firms, chemical engineering businesses, and more. We can make sure you target the right buyers with finely tuned and highly relevant marketing materials.
  • Put a Plan in Place to Address “Indispensable Leader” Concerns Not every business seller plans on staying involved within the company; many are ready for retirement or a fresh challenge. In these cases, it’s understandable that buyers worry about continuity – especially in engineering, where projects are often large and multi-faceted. Replacing the leadership skill and institutional knowledge of a founder and CEO is no small task. However, these concerns can be mitigated by putting a proper transition and integration plan in place. This should be a detailed organizational strategy that outlines how existing managers and company processes will work together to ensure that the business does not skip a beat post-sale.

Why VR New Haven is the Leading Choice for Engineering Business Sales

Our satisfied clients have made VR New Haven one of the best business brokers in CT. We operate a general mergers and acquisitions (M&A) practice and advise sellers in a variety of verticals and industry niches, including engineering.

VR New Haven is dedicated to helping clients facilitate timely and successful engineering business sales by offering a range of important services. First, we ensure that all preparations are in order and that no sale will be derailed by missing documents or overlooked planning steps.

Then, we follow a proprietary model that helps us value businesses appropriately across 32 specific industries. We consider:

  • Strength and Depth of Company Management
  • Quality of Current Customer Base
  • Quality of Financial Controls
  • Threats of Competition in the Market
  • Vendor and Supplier Risk Assessment
  • The End Markets a Company Operates In

By leaning on our expertise, we help engineering firms identify a proper valuation, greatly reducing the odds that sellers will leave money on the table.

VR New Haven also helps sellers negotiate a final price. These negotiations are often one of the most challenging aspects of closing a transaction, as sellers typically have limited experience in this area. Because we are experts in both valuation and negotiation, we can ensure that deals are closed quickly and on favorable terms. We also have the experience to offer sellers a key market context so that they can make more informed decisions.

Finally, VR New Haven can link engineering business sellers with qualified and targeted buyers. In an industry where the pool of purchasers is limited by regulations, this can save sellers a substantial amount of time and money.

Contact VR New Haven to Learn More

If you’re interested in learning more about how to sell an engineering company – or if you’d like to discuss your engineering business opportunity specifically – please contact VR New Haven today.