2003 Fall/Winter Volume No. 2
What is the Value of Your Company?
What is your business worth?
This is a question many people do not know the answer to.
Ever wonder what your business would be worth if you decided to retire, or to sell it in order to improve your financial position? There are few people who know the answer to that question better than Mark Duncan, Chief Acquisitions Officer of United Site Services—the Nation’s fastest growing portable restroom company. He is responsible for buying more portable restroom businesses than anybody else in the country.
In business only three years, United Site Services has already made 33 acquisitions in major markets around the US. JohnTalk spoke with Mark recently to find out what it is that he looks for in a company. What makes one business more valuable than another? And, what happens to employees, customers, and the owner of a company once it is sold.
QUESTIONS TO ANSWER
What is it that you look for first in a portable restroom operation?
Essentially, when we buy a business the most important thing we are buying is the company “brand.” In some cases, a good brand is more valuable than the tangible assets.
Could you explain what you mean by brand as it relates to a portable restroom business?
Your brand is basically your market reputation. If your company is seen as the top supplier in a geographic area in terms of quality product, quality service, and customer satisfaction, then you have a very strong brand. You don’t have to be the biggest to have the best brand recognition. Businesses with strong brands have generally grown in a market for a long time, or are run by someone who is well known to the customers.You build your brand by using consistent marketing, and always providing superior service.
United Site Services has built our reputation by maintaining high-quality service in the new markets we enter. We aren’t interested in buying a company known for cut-rate service because that’s not what we provide. Obviously, the customers of that sort of business wouldn’t be as valuable to us.
After brand, what other things do you look for?
We like to find a company that is well organized and well capitalized. It is much easier and less expensive for us to take over a company that has clean books, welltrained employees, and well-developed routes, than it is to try to turnaround a company that is struggling.
We also like to find high-quality assets. Trucks, equipment, and restroom units that are modern and well maintained are fairly easy to appraise. Equipment that is at or near the end of its useful lifecycle is harder to value and of less interest to our company.
When you buy a business what should employees of the former business expect in the transition?
For the most part, we try to keep the employees. Well-trained, reliable employees are one of the assets we look at in setting a purchase price, so we would hate to lose them. Once United Site Services takes over, employees generally get better benefits because as a larger company we are able to provide healthcare, 401K, and other perks that smaller companies have more difficulty providing. Our corporate offices handle things like business development, finance and administration, human resources, and information systems. Functions such as sales, routing, billing and customer services are managed locally.
How do you handle the transition to new ownership with customers?
We like the transition to be as transparent as possible. Customers should not be concerned because our goal is to always provide service at or above the level provided by the previous owner. Often we hire the owner or senior management to stay on and manage the transition. In many instances, the customer will be seeing the same driver, calling the same phone number, talking to the same office people, and paying their bills in the same way.
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