Over the past five years, the electrical contractor industry has grown 3.8 percent annually, generating $179 billion in 2018 alone. The need for experienced electricians and contractors is highly prevalent throughout Charlotte and its surrounding areas, especially for those who specialize in niche areas, such as installation for wireless networks, new construction, or energy-efficient lighting. If you’re interested in buying an electrical contracting business in Charlotte, NC, follow these six tips to find a great opportunity and negotiate the best deal.
6 NEGOTIATION TIPS FOR BUYING AN ELECTRICAL CONTRACTING BUSINESS IN CHARLOTTE, NC
When buying an electrical contracting business, you need to hone in on your negotiation skill set to receive the most favorable terms and sales price. These six strategies will increase the likelihood of entering into a more successful negotiation.
STRATEGIZE YOUR CONCESSIONS
Even worthwhile deals require you to compromise and offer something of value to the other party. It’s good to plan for this ahead of time so you can recognize what you are and aren’t willing to bend on. This will allow you to stay on top of a good deal while it’s still on the table. The key to having your concessions reciprocated is to make the seller aware that you’re giving up something of value. Be direct in how they can repay you. If you suspect they won’t offer anything in return, make your concession contingent.
KNOW YOUR WALK-AWAY NUMBER
While the goal of a negotiation is to walk away with the best possible sales price, most of us understand that we may have to resort to the higher end of our budget to receive all that we’re looking for. Before entering into a negotiation, you’ll want to set an absolute maximum you’re willing to spend on buying an electrical business. Furthermore, you need to be disciplined enough to walk away or counteroffer if that number is exceeded.
ATTITUDE/DEMEANOR MATTERS
Never forget that a seller could be fielding more than just your offer. Whether the terms you’ve set are more favorable or not, a seller will sometimes go with the candidate they feel most drawn to. One technique for building your repertoire early on is to negotiate the “small stuff” first. This allows each party to show their good side by working through issues that aren’t as likely to stir opposition.
KNOW THE MARKET
When buying an electrical contracting company, you have to consider market fluctuations and customer base. Industry trends are essential when negotiating your offer to a seller; it shows you’ve done your homework and are influencing your decision by relevant statistics. Plus, you can examine what similar electrical contractors have sold for to further leverage your bid.
UNDERSTAND YOUR SELLER
The party selling the electrical contracting business is going to be concerned with the sales price, but you may be surprised to find just how much they fixate on other issues, as well. The terms of a sale are highly formidable, especially if the seller is planning a swift exit. When negotiating, inquire about stakes/control, financing, the transition period, and post-sale involvement to see if any other factors are driving the current owner.
KEEP THE MOMENTUM MOVING
The longer a deal is on the table, the more likely it will go wrong. Of course, you don’t want to jump into any agreements without due diligence. Instead, you’ll want to stay on top of responding to communication, turning in documents, and any other required courses of action that could impede a sale.
Negotiating a business sale can be stressful for both parties; however, it is an essential step to get to the closing stage. VR Business Brokers of Charlotte, NC has helped facilitate sales for hundreds of buyers in Charlotte, Florence, Columbia, Hickory, and other surrounding areas. Contact our team of brokers today for professional representation when buying an electrical company in Charlotte, NC.