As a significant part of the construction industry, the carpentry and joinery sector takes a key place in what are often lengthy supply chains. But selling a carpentry and joinery business requires careful planning to address the intrinsic issues faced by your sector, as well as those arising naturally from such an important business transaction.
Planning several years ahead of a sale is advisable, but knowing your objectives and goals from the sale are essential whenever you decide to place it on the market. Understanding what buyers are searching for in a business such as yours, also helps to present it in the best light.
So what issues might threaten the success of a business sale in your sector, or compromise the value you need to extract?
New competition from businesses using wood substitutes, in addition to the fact that commercial building projects tend to focus on steel as the major material, could negatively influence buyers if they believe the business could lose market share in the future.
This, and failing to consider the advancements in technology that have taken place in recent years, could lead interested parties to devalue the business if you have not invested in new computer aided design and production software.
If your business exports goods to the EU, the UK’s forthcoming exit from the European Union and current lack of tangible trading agreements, may also create uncertainties about future sales and profitability. Furthermore, importing goods from the EU is likely to increase considerably if the current VAT agreement with Brussels does not continue.
A serious shortage of skilled tradespeople is an ongoing and challenging dilemma for businesses in this sector. In addition to government changes to the apprenticeship scheme that are described below, the skills shortage is likely to adversely affect carpentry and joinery businesses in the future if it is not addressed now.
A change to the apprenticeship system in the UK means that employers now have an additional administrative and financial burden to deal with. The changes mean that eligible employers must negotiate the cost of training their apprentices directly with providers and purchase the training online, creating a new administrative obligation.
Cuts in government funding for apprenticeship schemes, and a new apprenticeship ‘levy’ of 0.5% for businesses with annual payrolls of more than £3 million, both reduce the possibility that the skills shortage in this sector will be tackled effectively, and also compromises the profitability of businesses involved.
So what can we do to help you overcome these problems, and how do we assist in a practical sense with the process itself?
Selling My Business has vast experience in corporate and business sales, and crucially, can offer extensive practical experience in the carpentry and joinery sector. We will help you present your business well, with a view to achieving the optimum price.
The business needs to be valued fairly and correctly, and we can use our database of contacts to market it to the broadest, but most appropriate, buyer base. By obtaining professional help to sell your business you gain access to detailed knowledge, and maximise your chances of extracting the highest possible value.
So what does the process involve?
This document provides interested parties with an outline of the business, and should include general information about your reasons for selling, financial reports and data, and information on such business areas as suppliers, contracts, and staff members.
Once you have narrowed down a shortlist of potential buyers, and undertaken negotiations with a single party, the heads of term agreement lays down the results of discussions prior to the due diligence process. Your prospective purchaser will need to check the information you have provided is accurate and reliable before they proceed any further.
The sales agreement details everything you have agreed with your buyer, potentially including warranties and indemnities, and any earn-out agreements if you are to remain involved in the business for a period of time.
Selling My Business can help you sell your carpentry and joinery business, using the experience and technical knowledge of our expert team. Please contact us to arrange a free consultation.
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