Selling Your Elevator Contractor Business: How To Get The Most Value

November 13, 2017
2 min read

If you’re thinking about selling your elevator contractor business, we’d like to help you figure out how to get the most value for it. For the average elevator contractor owner, the value of their operation will largely be based on the net present value of their maintenance contract cash flows, discounted against the acquirer’s cost of capital. What this means is the value of the business is calculated based on how much cash the maintenance contracts can potentially generate over a mutually agreed upon time horizon that is measured in today’s dollars discounted by an interest rate to account for the time value of money.

The acquirer’s cost of capital is equal to the interest rate assumed if capital was either borrowed for the acquisition or the rate of return they could obtain in an alternate investment with the same risk profile. This factor is largely out of control of the contractor.

The cash flow potential of the contracts is something that contractors can control and is something that buyers will do a lot of due diligence on. Companies who have their eye on an exit should be focused on visibility and accurate and timely reporting of maintenance contract profitability. Buyers will reduce the value of the company when contractors cannot produce credible data around contract revenue, costs, margin, and risk. FIELDBOSS Lift is designed to continuously expose maintenance contract vital signs so that management can be abreast of and reactive to the health of their contracts. Building owners will purchase a more profitable maintenance contract if the contractor can deliver data that proves a good PM program will reduce unscheduled repairs and defer modernization costs. Contractors whose operations systems are not properly connected to what is happening in the field or in the back office always pay a price when it is time to defend the value of their business.

If you’re thinking about selling your elevator contractor business, let us help you create a profitable business that will be appealing to acquisition candidates and sell quickly for an attractive profit. Contact us here. 

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