An equipment rental company is usually a highly profitable business model, so if you are thinking of selling it, the most important thing before setting your asking price is to make the correct valuation, in order to take the most profit from the sale.
Equipment rental companies are considered profitable firms that operates in a well defined and protected niche. They are quite valuable and sell often.
This means that there are plenty of business sale you can use to estimate what your company is worth, so pay attention on that aspect as well.
What is your Equipment Rental Company worth?
To value your business there are many facts that need to be well defined to attract possible buyers. First, gather all finance information you can find and compile those numbers into a report. As equipment rental companies usually are very big businesses, with a great deal of money on transaction almost every day, is not easy to gather this kind of information.
Below are the information we analyze to predict valuations, and how you can benefit from each topic:
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
What makes a Equipment Company worth more?
If you are going to set your asking price, you can’t rely only on your business first valuation. Before defining the price you want to ask, be aware of some differentials that can make your equipment rental company worth even more.
Take a look at the metrics below:
- Predictable key drivers of new sales
- Stable or growing traffic from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Traffic stats
- High percentage of repeat visitors and repeat sales
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
What does the average Equipment Company sell for?
Since 2005, when our research began, there has been only 60 equipment rental companies sales in the United States. However, despite that, total transaction value for the same period was higher than $18 million, which shows how profitable this business model can be.
In the same way, average sales price is up to $300k, and average multiple rate is a little bit higher than 2, which shows that, even if you don’t take a huge profit from an equipment rental company sale, at least the amount of money you’ll get is certainly very high.
What is the most frequent deal size?
Despite that, most frequent deal size is $150k, half of average sales price, which means that, even though equipment rental companies can be very valuable, most of them is a little bit smaller and, therefore, worth less too.
Is the Equipment Company market getting bigger?
Equipment rental company market is always living a good moment, but it’s not possible to say that it is getting bigger. Take a look at the last years total transaction value, from 2010 to 2015:
Are bigger businesses worth more?
Yes. As you can see in the chart, the higher the deal size the higher the average multiple. This means that the most valuable the equipment rental company, the most profit its owner will get from the sale.
What states have the most Rental Company deals?
Are you wondering where the most deals were made throughout the country, or if your state has a hot market to sell fast? As you can see if you are located in Arizona, Texas or Florida, you may get a lot more offers than if you are in Nevada or Idaho. But sometimes you can overcome the low number of deals with investors or competitors looking to enter a specific new area, and get lucky with an offer.
Why would you sell in the first place?
The reason to sell always varies from each person. Maybe you are looking for new challenges, businesses and opportunities, or you just want to enjoy your family and retire. Although it can seem tempting to get your hard worked cash, make sure that you are clear on the motives so you don’t regret afterwards.
How long will it take to sell your Equipment Rental Company?
If you have read all the necessary steps to understand your valuation, and think you have focused on all the topics that make your company worth more, it is maybe time to start the process. Selling your business is a long-term process, and doesn’t happen overnight. Usually companies sell in 12 months, but you can also see deals getting closed in 6 to 9 months depending on the opportunity.
What is the process of selling your company?
This step by step process will help you get less confused when you make sure you are ready and confident to let go of your business, and perform a nice and positive sell. Many entrepreneurs forget about a step, or just don’t have the right guidance to know all the stages necessary and get lost through the process. Don’t forget to go through all of these, and if you have any questions, comment at the end of the article or contact us for more help.
Who will buy your business?
If you are wondering about the buyers that can be interested in your Equipment Rental Company, don’t worry, there are many options and possibilities. From First Time entrepreneurs, to businessmen interested in new opportunities, the chances are that in the equipment rental industry it may likely be a person who already had a store in the field.
Since 2005, there have been only 60 equipment rental companies sales in the United States. Average sales price in this period was up to $300k, which shows how profitable this market can be.
So if you want to start accelerating your buyout process, fill out our free valuation form and get your business valued today. Leave your comments on any doubts or feedback, we are glad to hear your thoughts.