Specializing in mergers and acquisitions of trade businesses, Fred Silberstein has personally overseen more than one billion dollars in business sales. Any contractor who’s considering selling their company, looking to expand, or bringing on a partner should consider Silberstein’s insight.
He says the trades are a hot commodity—but knows that parting with a family business can be an emotional rollercoaster. He may be partial, but he also recommends hiring an expert to help broker any type of deal.
Here are Fred Silberstein’s top tips for any contracting company owner thinking about buying or selling the business:
Key TakeawaysHome services industry M&As are in high demandSelling your business can be an emotional transaction.Before you do a deal, be sure of your end goal. Maintaining normalcy during the process is important. Mergers and acquisitions are similar, but different. Before doing a deal, get your books in order. ServiceTitan is a good way to get your books in order. Don’t try to do a deal without a professional involved. Recommend research and reading
Home services industry M&As are in high demand
It's a great industry and the dynamics in it are incredible, Silberstein says.
“A lot of times, these business owners don’t realize the asset they’ve built and the value that they’ve created,” he says. “A lot of contractors get so caught up in the day to day and the operations and the mundane tasks. I'm able to help them take a step back, analyze the big picture, and focus their goals.”
Selling your business can be an emotional transaction.
“Sure, it’s emotional for a seller,” Silberstein says. “The company is like their baby, right?”
He says part of his job is to be a calming influence and keep as much emotion as possible out of the equation. To that end, Silberstein says some clients have thanked him for acting like a part-time psychologist along the way.
Before you do a deal, be sure of your end goal.
The biggest lesson Silberstein has learned is that a company owner has to be very clear about what the transactional goal is. “That can be different for different folks,” he says. “You might want liquidity. You might be looking for a partner to grow with. The key is to know that and make those expectations clear. You shouldn’t be moving the goalposts while the deal is happening.”
Maintaining normalcy during the process is important.
On a day-to-day basis, the business as it stands before the transaction should look largely the same as it does after, Silberstein says. Most companies continue to use the legacy brand.
“During a deal, it’s critical for employees not to leave and to not upset the workforce,” he says. “It's also critical for the phone to keep ringing and the opportunities to keep being created.”
Mergers and acquisitions are similar, but different.
An acquisition is essentially a buyout, Silberstein says. A merger is more of a partnership.
“Fundamentally, there’s not a big difference,” he says. “They’re both transactions. The bigger deals tend to be along the lines of mergers, and the smaller deals tend to be more outright acquisitions.”
Before doing a deal, get your books in order.
“The first, most-important thing to do is get your financial house in order,” Silberstein says. “Get gap compliant, start working with all the relative financial aspects.”
He says most of the bigger contractors have a lot of systems and processes in place, are organized, and can pull data. Smaller companies tend to be less organized and are constantly trying to pull data.
ServiceTitan is a good way to get your books in order.
“All the contractors that I work with are very happy with ServiceTitan,” Silberstein says. “It allows them to be a lot more efficient.”
He says that merging two companies that both already use the software platform is ideal. It helps on the front end of the deal, and it helps the companies integrate smoothly after the deal is done.
Don’t try to do a deal without a professional involved.
Silberstein says far too many owners try to reach out to other companies on their own to broker a deal. He says they’re fooling themselves to think it’s not a delicate and intricate process.
“It’s important to make sure you have an intermediary—someone who’s watching your back,” he says. “A contractor understands the contracting business. We’re experienced, savvy dealmakers with tons of experience.”