There’s no doubt that tech companies get a lot of headlines these days. They’re hot, and they continue to have high valuations.
But quietly, more and more buyers are looking to purchase companies that are not going to be subject to AI disruption over the next few years. Savvy workers, corporate retirees, and immigrants are looking for small- to mid-sized companies that are service-based and generate plenty of recurring revenue.
And they’re on to something important. Ford Motor Company CEO Jim Farley has been a prominent voice highlighting the importance of what he calls the “essential economy”—the blue-collar sectors that move, build, or fix things, representing roughly $12 trillion in U.S. GDP. Here’s why we’re excited about reselling Mr. Handyman franchises:
Comparables are showing healthy multiples when buyers make offers. Recently, we sold an existing Mr. Handyman franchise in Houston for a multiple of about 3.1 times the Seller Discretionary Earnings, or SDE (which buyers usually base the offer on). We’re seeing the same trend in auto repair, HVAC companies, and other trades.
Young workers are increasingly interested in the skilled trades. Recruiting and retaining talent is every business owner’s primary goal – and headache. Gen Z workers have been dubbed “the toolbelt generation,” and they make up 25 percent of new hires in the trades. They’re increasingly dissatisfied with four-year colleges and higher education debt, choosing trade schools for their faster track to employment, lower cost, and paid apprenticeships.
AI will never be able to replace a skilled tradesman. Home repair and other trades will never be “sexy,” but they will remain essential services for any business or homeowner. Services that require humans to perform them will always be with us. And since most home repair companies are run by individuals, reliability and quality can vary dramatically. A franchise model like Mr. Handyman gives you confidence that you’ll have a blueprint for success, with marketing and other support from a large corporation. Mr. Handyman reports that its franchisees have a 55 percent return rate, which makes its model very attractive to buyers seeking recurring revenue.
Buyers don’t need technical expertise to be successful owners. Retirees, corporate escapees, and former military or government personnel are attracted to franchises because they receive complete and transparent information—by law—regarding financial commitments, potential earnings, average income, and all fees and requirements from the franchisor. They also undergo a thorough mutual evaluation process to determine whether the business is the right fit for them. It gives them confidence that they understand everything they need to before they commit. They’ll also get to meet the corporate franchisor team and go through intensive training, including help creating a marketing plan. They don’t need to know how to turn a wrench; they just need good people and business skills.
Most franchisors put all their resources into selling new franchise territories. But Mr. Handyman’s parent company, Neighborly, understands that reselling franchises is a good way to help owners retire or transition out of the industry and bring in new talent.
We’ve been in the business of helping owners in many industries sell their franchises. Because we specialize in franchises, we know the most effective sites for attracting the attention of the most motivated buyers. For the past two years, we’ve averaged four offers for every franchise we’ve listed. With a well-established pool of over 23,000 buyers looking to buy a business, more competition means better offers and better terms. We handle packaging, listing, and marketing your business, and we vet potential buyers so you don’t waste time on people who don’t have the means to make a serious offer or aren’t ready to close quickly.
If we can help you connect with the right buyer (or backup buyer) for your business, let’s start a conversation.
