2020 was a crazy year for M&A in the home services industry, and 2021 is shaping up to be no different. It’s an exciting time to be in the trades. There’s a spotlight on our industry, and it’s time to make moves or get ready to do so when the opportunity strikes. The brothers Ringe, Tyler and Travis of ProSkill Services, capitalized in 2020 to not only better their bottom line, but turn their company into a lifestyle business for themselves and stumble into the world of M&A.
In 2019, Travis and Tyler knew they needed to stop trying to wear all of the hats in the company and start delegating and forming a management team that could help reduce their workload. This is the process of creating a lifestyle business: a business that works for you, not you working for the business. They set a strategic goal for 2020 to build out the right people and put them in right places so they could simply steer the ship instead of being the captain, the deckhands, the cook, and everything else.
Now, they have a GM and management team in place that they can trust to handle the day-to-day operations. Tyler and Travis didn’t have a healthy bottom line in 2019, but after getting the pieces together and focusing on creating a lifestyle business, true synergy started to happen at ProSkill Services. They’ve always been profitable, but 2020 was a great year for many reasons, including allowing Travis and Tyler to set their sights on something they never thought they’d be ready for so soon: selling the business.
Part of the growth ProSkill Services experienced between 2019 and 2020 (more than double in net profit, from 7% to almost %17) was due to an exercise Travis and Tyler performed in pricing. They were competing with other local area contractors, who the brothers are first to admit are also great companies, but much smaller and with much different overhead structures. They recognized ProSkill Services was providing way more value than they were charging for, something their technicians and sales team already knew all too well! In fact, many of the glowing reviews for the company mentioned things like “cheapest price”, and customers would routinely say “that’s it?” when shown the final cost for a service. Travis and Tyler didn’t want to be the cheapest price on the block, they wanted to be the greatest value.
In the past, Travis and Tyler were only focused on high quality customer service. That’s what had allowed ProSkills to earn such an incredible reputation, but the reflection of value provided for service simply wasn’t there in the final price. Some great advice the brothers give, especially for those that would price cheaply to try and steal the market: “price for where you’re going, not where you’re at”. Price your services like you have a 401k, benefits, and a beautiful shop with a ping pong table and free lunch. After all, that’s what you and your employees want! Sure, you might see some slower growth, but it will mean being able to hire, train, and grow the way you want to. As long as your pricing allows for great value from your service, the cost should not be the focal point. It’s the customer experience and the end result that truly matters.
In June, Tyler and Travis were invited to Las Vegas by some fellow industry members. During a lunch, Tyler was sitting next to Brian Cohen, previous guest of To The Point and Business Strategist for SF&P Advisors. Brian was picking Tyler’s brain, trying to get info and gauge the brothers’ interest in selling the business. Tyler and Travis had no intentions of selling, and saw themselves as young entrepreneurs in it for the long haul. Brian eventually opened up their eyes to the fact that selling didn’t mean they couldn’t still run the business; just simply take some chips off the table.
Tyler and Travis went to dinner with Brian to look at the financials and talk multiples, more out of due diligence than anything else. While they turned the idea down, they did learn that their company was worth more than they were giving it credit for. They took Brian’s advice to at least have ProSkill Services valuated so they’d know where they stood. The brothers were starting to see the benefits of an acquisition, and decided to seriously entertain the idea. Tyler and Travis got their number, gave a number it would take to make it worthwhile, and before they knew it, they had suitors left and right. There was a ton of action and things moved fast, as there was a lot of interest in the business. It sold in just a few weeks, and Tyler and Travis learned quite a bit in the process about both mergers and acquisitions as well as about their business.
Had they not taken the time to focus on pricing their services for where they wanted to be and get their bottom line in order, selling the company would have been much different. In creating a lifestyle business, they had also set up a GM and management team that were more than capable of keeping the gears running. All of this combined with a great brand reputation made ProSkill Services an exceptionally sought-after acquisition, and gave Travis and Tyler leverage in picking the partner and offer that was best for them and the future of the company.
A big part of successful M&A is finding the right fit. Travis and Tyler actually walked away from a $6 million dollar larger offer because it was a bad fit for their team! They found a partner in Service Champions that was a great fit, not only for a mutual respect for shared core values, but because Service Champions trusted Tyler, Travis, and the ProSkills team to continue running things. ProSkill Services is excited to take their already great processes and services and elevate them even higher as a benefit from teaming up with Service Champions. The transition was simple, as Travis and Tyler had already done the hard work of creating a business with a healthy bottom line and stable, capable management team.
Another key component in their M&A success was partnering with the right brokerage. SF&P is an industry-specific partner for the home services industry that specializes in handling mergers and acquisitions. Tyler and Travis credit a massive amount of the hassle-free, high value M&A experience they had to SF&P handling the details they simply wouldn’t have been able to tackle had they done things on their own. SF&P was in every call, and had gameplanned scenarios to have the answers for prospective buyers at every turn. Tyler and Travis highly recommend finding a broker to represent you and your company should you go to market, whether it’s SF&P or another team.
M&A used to have somewhat of a negative connotation in the home services industry, but that’s changing rapidly. Whether or not you’re considering selling your business any time soon, the steps to prepare yourself for M&A are in fact the same exact steps you need to create a lifestyle business for yourself. Getting your bottom line in order by pricing for where you want to be, creating a management team that can take the pressure off of yourself to stop being the only one who has the answers, and nailing down your processes is what will enable you to enjoy your business fully and be ready to pounce on an opportunity should one present itself. After all, whether you sell your business now or continue to run things until you can’t anymore, at some point, all of us have to let go at some point. If you build up a great team and company that can run itself, whether you sell, transfer ownership to your children, or go down another path, when you finally leave the industry, you can have peace of mind that your legacy will remain intact.
Grab 2021 by the horns and get your bottom line and business in order! You’ll be glad you did, whether or not you’re ready to sell. If you’d like to learn more about SF&P, reach out to us and we’re more than happy to connect you with Brian Cohen and Fred Silberstein, previous guests of To The Point.