What is a fair price to sell home inspection business

Sure. My BUSINESS is for sale any day of the week.
As Brian mentioned above… I am the true asset. I can start a new company anytime with little downfall.
The majority of my clients hire ME, not my company name.
Note: I do own multiple Inspection Companies.

2 Likes

At least you priced it right. :wink:

3 Likes

That is the cost of 5 years of Domain name registration from Google!

2 Likes

@jfudge Great article! Good for those who think they have something to sell and good for those who think they have something they want to buy.

Multi-firm is the only way to go buying or selling unless you can get someone to buy beach-front property in SD

1 Like

I remembered this post. He was even willing to let someone take over payments on his truck! :smile:

3 Likes

Wow, what a nice guy. A gift from heaven. Only $75K.

Btw, 2020 was one of my best years.

1 Like

It sounds like his client base is realtors. They have no reason for loyalty to a company. They usually like the person running the business. When that guy/gal leaves, that connection is gone. Even if he personally introduces you to everyone of those agents with a ringing endorsement; most agents refer out to at least three inspection companies and they will usually default to the other two. His company is worth nothing more than the tools that he throws in.

1 Like

Jeffrey,

Would you be willing to elaborate on this? I’m curious as to why someone might create multiple inspection companies.

Are they all in the same market?

You mentioned that you are the product (not the company) - how do you market the benefit of you (the product) across different entities?

What benefits do you find in having multiple companies?

What disadvantages do you see in having multiple companies?

Thanks in advance!

Mathew, I think that the general consensus is right on. There’s really nothing to buy but the name and phone number and that may prove useless in time. There’s no brand recognition. Nothing tangible. He hasn’t done anything that anyone here hasn’t done with effort. Save your money, work hard and create something of your own. Best of luck. We’re all here to help.

1 Like

Here is my experience:
When I moved to a new city, I gave my employee my old business for free, and that is about what it was worth.

He got a head start vs starting from scratch, but he was not able to maintain the level of business. It went from six figure to him doing only one home a week.

You can acquire the business name easily, but it takes time to acquire 20 years of experience and the reputation that goes with it.

This is what Dave Ramsey has to say about it:
There are really two formulas most often used in small business for valuing a small business. The minimum that your business is worth is called book value, and that is if you just closed the business and sold off your inventory, collected any bills that were due to you—any receivables—paid the payables and any bills you owed out and netted out the cash. In other words, how much after you sold off everything and collected everything would you have in your hand? That’s called book value, and your business is worth at least that because you can just close it and get that out of it.

The most your business is worth is somewhere between four and five times your net profit after you are paid as an employee—a reasonable wage for your employment. So if you’re not paying yourself a salary out of your business, then you would have to pay a manager to manage the business if you didn’t work there every day. Take that out, and whatever the net profit is of the business—taxable profit—after the basic wages are paid to operate the business and the other expenses are paid to operate the business, about four or five times that—that gives a 20 or 25% rate of return for an investor buying the business. That’s called a cap rate method of placing a valuation—a capitalization rate method of placing a valuation on the deal, and that’s what you want to get into.
Valuation of a business - Ask Dave | DaveRamsey.com

6 Likes

Book value for me - Truck, a few tools, camera, flashlight, ladders.

Easy in, easy out I suppose.

2 Likes

1-person shops, even long-term successful inspection “companies”, have little sellable value. The intangible and unpredictable factor in the transaction would be… how many of the clientele will remain with you, once the seller backs away? A 1-person shop has returning clientele because of that 1 person, and how they do business. Once that ‘known entity’ leaves, there is no reason for the clientele to stick around, just because someone paid that person for their client list (that’s really all that is being done). After a sale like this, agents typically move to their alternate inspector who they know, not the new guy they know nothing about. I recommend, don’t do it. If anything, offer a nominal amount up front and a percentage of return clientele business for a set amount of time (1, 2, 3 years…). That way, you aren’t paying for a client list that abandons you, the moment you start answering the phone.

2 Likes