Selling a MEP Company
Thinking of selling your mechanical, electrical or plumbing company? You will find lots of important information on this page that clarifies what you need to do to achieve a successful exit from your company.
We cover why MEP engineers and business owners choose to sell their company, how to set the right valuation and the steps you should take to make sure everything is properly prepared.
And remember, selling your company is not something you need to do all by yourself. When you join forces with an expert company sales adviser like KBS, you can benefit from the vast experience and knowledge we have built up over 25 years of selling MEP businesses.
Selling a MEP Company
CHALLENGES IN THE MEP SECTOR
Economic conditions in the UK over recent years have impacted the potential profitability of MEP companies. Disruptions to supply chains caused by the Covid pandemic and the conflict between Russia and Ukraine escalated material and energy costs.
The pandemic also brought construction to a halt, with heating, ventilation and air conditioning (HVAC) contractors generating most of their revenue from the residential market. Following the subsequent recovery, rising interest rates to combat inflationary pressures also caused a slowdown in both residential and commercial construction.
However, MEP companies remain in strong demand in the acquisitions market with the government having set target numbers to increase the UK’s housing stock. Schemes to accelerate the installation of renewable energy systems, amid the drive to achieve net-zero carbon emissions, as well as a more favourable economic outlook are also pointers towards the potential to achieve high values.
WHEN SHOULD YOU SELL YOUR MEP COMPANY?
Selling your MEP company should not be an overnight decision. The first thing to do is clarify what you would do if you were not running your company – are you ready to retire, relocate or try something different? Whichever of those lifestyle choices you opted for, you would need to make sure the sale of your company provided the capital to fulfil your objectives.
Additionally, it is wise to establish whether market conditions indicate it is the right time to sell an MEP company. As we have described in the section above, external factors can influence the right moment to test the water, while you may also need time to make sure everything is in place – financially and operationally – to present the company in the best possible light to potential buyers.
VALUING A MEP COMPANY TO SELL
The valuation of a MEP company is largely based on its profitability and established revenue streams resulting from contracts, client relationships, recommendations and effective advertising.
When KBS generates the value of a MEP business, we typically present the company’s annual earnings before interest, tax, depreciation and amortisation (EBITDA). That equation effectively communicates the true operating value of the company before considering external factors.
You will typically be seeking a multiple of your EBITDA when proceeding with a sale. Although the industry average for MEP companies ranges between 4x and 6x, we take pride in maintaining a network of buyers actively competing for the most attractive opportunities.
I was happy, it was an easy process and KBS handled it well,
I would recommend KBS Corporate to anyone who wants to explore a business sale and is seeking sound advice.
Tim Hogarth
Founder of Hogarth Antiques Ltd
“I was happy, it was an easy process and KBS handled it well. I would recommend KBS Corporate to anyone who wants to explore a business sale and is seeking sound advice.”
KBS Corporate has been a fantastic partner for us.
Within six months of the initial teaser, the deal completed and we are all thrilled with the outcome.
Ed Johnson
CEO of PushFar
“KBS Corporate has been a fantastic partner for us. From initial research through to deal completion, George Barnes (Associate Corporate Director), Aaron (McWilliams, Senior Research Analyst) and the entire team were dedicated, hard-working, thoughtful, considerate and found several parties interested in our business.
“Within six months of the initial teaser, the deal completed and we are all thrilled with the outcome.”
10 FACTORS THAT AFFECT THE VALUE OF YOUR MEP COMPANY
24/7 service: Do you advertise your company as a 24-hour operation? Offering out-of-hours support can set your firm apart from the competition, giving customers faster response times and greater engineer availability.
Eye-catching branding: Ensure you provide a positive image of your business with well-kept vehicles and work clothing that display the company’s logo and contact details, plus an active social media presence.
Motivate your staff: Your employees need to be cheerful, professional and respectful when dealing with clients to generate maximum customer satisfaction, and you can also invest in their training for new qualifications.
Tick all compliance boxes: Ensure all your engineers have the correct licences and that your company complies fully with local regulations and building codes to protect from legal issues, fines and penalties.
Create a succession plan: You cannot sell a company that would fall apart upon your own exit. Make sure your staff are aware of their responsibilities and delegate new tasks of which they can take future ownership.
Recurring revenue: Proving you have reliable, regular revenue streams will not only reduce any risk attached to acquiring your company but also benefit the valuation by contributing to higher multiples.
Client base: A strong, diverse client base can lead to strong relationships and word-of-mouth recommendations. Commercial contracts are key not only from a revenue perspective, but for potential growth.
Company reputation: How positive are your ratings on the leading review websites? Ensure you have an appealing Google Business Profile and gently encourage satisfied clients to provide a written endorsement.
Sustainability: Offering environmentally friendly services can conserve water, reduce energy usage and waste, and align with clients’ growing preference for sustainable options, thus increasing the appeal of your company.
Expand your service range: If you concentrate on a particular aspect of the MEP sector, consider venturing into a different area – for example, HVAC or by providing electrical services if you are primarily plumbing-focused.
FINDING A BUYER FOR YOUR MEP COMPANY
With more than a quarter of a century’s experience of selling MEP businesses, KBS is ideally placed to source the ideal buyer for your company.
We have an unparalleled network of contacts to identify the perfect acquirer who not only has the financial means, experience and ambition to push your company forward, but will also adhere to the boundaries of confidentiality during the deal which are set within the Non-Disclosure Agreement.
The range of buyers we will explore, utilising our bespoke technology platforms and the expertise of our researchers, includes:
Trade buyers – We have access to over 4.5million UK companies and data on more than 1.7million M&A transactions, providing us with the ideal platform to ensure your business is presented to the right selection of trade acquirers.
Private equity buyers – Our internal resources and professional network enables us to work closely with private equity houses of various sizes. We have a rich history of achieving PE investments that have far exceeded our clients’ expectations.
Alternative routes – You may have a staff member who is ambitious and ready to take on the responsibility of heading up a MEP company themselves. This can be facilitated by way of a Management Buyout, which is among the exhaustive range of options we consider on your behalf.
EXPERT SUPPORT SELLING A MEP COMPANY
In terms of selling MEP companies, we have over 25 years of experience in negotiating transactions and our team of experts has established us as the No 1 mid-market adviser in the UK.
An award-winning one-stop shop for every service you need to successfully sell your company, we provide a unique, tailored approach that incorporates the latest data and state-of-the-art technology to not only identify the perfect buyer but also steers you through each step of the process towards fulfilling your objectives.
Contact us on 0161 258 0118 for an initial no-obligation discussion in complete confidence to find out more about how we can help you to sell your MEP company.
SALES WE HAVE COMPLETED
IN THE PLUMBING SECTOR
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G&M Heating Utilities
Sector: Plumbing and Heating
Location: Greater Manchester
Buyer: ThirdWay Partners
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John Unwin Electrical Contractors
Sector: Electrical Contractor
Location: Leicestershire
Buyer: Sintec UK
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