278 - Maximize Your Contractor Business Sale: How Private Equity Values What You've Built with Christian Olson
The Cash Flow Contractor
00:00
Different Flavors of Private Equity Explained
Christian outlines family offices, fundless sponsors, and committed capital funds and how each approaches lower-middle-market deals.
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Episode notes
Wondering if your contractor business is ready to sell for top dollar? In this eye-opening conversation with investment banker Christian Olson from Footprint Capital, we uncover why 7 out of 10 business owners accept offers without knowing their true value - potentially leaving millions on the table. Learn exactly how to position your business for maximum value with a private equity buyer.
What You’ll Learn
- Why standardizing systems creates higher valuations (not lower ones)
- How to become a "platform company" and secure a second bite of the apple
- The critical difference between business brokers and investment bankers
- Why culture is the hidden value multiplier buyers scrutinize most
- When (and who) to tell about your plans to sell
Time Stamps
- 00:14 - Discussing Business Deals
- 01:18 - Impact of Interest Rates on Business Buying & Selling
- 03:36 - Role of Investment Bankers
- 06:54 - Understanding Private Equity
- 10:59 - Steps to Getting Acquired
- 14:14 - Importance of Company Structure
- 17:13 - Standardization and Value Creation
- 22:33 - Culture and Management in Business Deals
- 28:06 - Understanding Business Valuation Multiples
- 28:39 - Importance of Due Diligence
- 30:49 - Case Study: Electrical and Plumbing Business
- 32:52 - Becoming a Platform Company
- 34:06 - Rollover Equity and Second Bite of the Apple
- 35:45 - Preparing for a Sale to Private Equity
- 38:41 - Common Mistakes in Business Sales
- 41:59 - The Role of Culture in Business Success
- 49:44 - Working with Footprint Capital
- 54:25 - Episode Outro
Snippets from the Episode
- "Seven to eight deals out of ten are sourced proprietarily, meaning no banker, no advisor. It's basically making that one-to-one handshake with the business owner." - Christian Olson
- "Being on ServiceTitan and being integrated across the board drives value because now you're trading expertise to the buyer. They're picking up something they may not have tried on their own." - Christian Olson
- "When you think you're unique, they're getting it from the guy next door. So you're standardizing that, but then it really boils down to execution. The software is just a tool." - Christian Olson
- "We've had several examples where the second bite of the apple is actually worth more than the first transaction." - Christian Olson
Key Takeaways
- Start preparing for sale years in advance, not months
- Standardization beats customization for maximum valuation
- Financial systems and proper accounting drive buyer confidence
- Culture and employee empowerment are critical value drivers
- Becoming a platform company creates exponentially more wealth
- Management team preparedness directly impacts final valuation
- Having an advisor typically pays for itself many times over
Resources
- 24 Things Construction Business Owners Need to Successfully Hire & Train an Executive Assistant
- Schedule a 15-Minute Roadblock Call
- Check out OpenPhone
- Build a Business that Runs without you. Explore our GrowthKits
- Need Marketing Help? We Recommend Benali
- Need Help with podcast production? We recommend Demandcast
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