For the past few years, private equity has fallen head over heels in love with the home improvement industry. As you may know, I decided to show them some love back and sold my business, CareFree Home Pros, in January of 2023. 

But I'm not just sitting around drinking Mai Tais on the beach (not every day, at least). I'm now able to spend even more time helping contractors like you grow their businesses. 

And so I wanted to share with you what I learned from my own experience of selling my business. Read on for 3 areas where you can focus your time and energy TODAY if you ever want to sell your business. 

#1 EBITDA

In case you're not yet familiar with EBITDA, it stands for Earnings Before Interest, Taxes, Depreciation & Amortization. This calculation helps a buying firm determine your company's profitability without the subjectivity of various accounting principles.

Now, typically a buyer is going to pay you 4x, 5x or 6x the amount of your annual EBITDA if you sell one product in a single market. If you sell multiple products in multiple markets, it could be 7x, 10x or even higher than that.

So what you can do TODAY to ensure your EBITDA gives you the greatest ROI when you're ready to sell is to increase your profits. Before you think that selling more is going to get you there - let me stop you and say that you need to first focus on getting a 20% NET profit (after your owner's salary, perks and benefits) on what you're already selling. Once you have this firm profit model in place, the sky's the limit.

#2 Systems

In my situation, the company that acquired CareFree had just bought a HUGE company 4x larger than mine. These private equity firms have a goal of doubling a company that they purchase within a year. And so it makes a lot more sense to purchase a LARGE company than my one-location operation in Connecticut. 

So why did they want to buy CareFree? 

One major element was how systemized the business was - and the quality of those systems. 

Over the years, we had built a system for just about everything. From Selling, to Recruiting, Setting Leads and probably anything else you could think of. If it was a repetitive process, we had a system for it. 

And it's because of these systems that I had worked my way out of the business. I was able to be so hands-off as the owner that I was working one half-day a week from my home here in Florida, while the business operated in Connecticut. It's because of these systems that the buyer knew the business could run perfectly without me. 

If you don't at the very least have a 10-Step Selling System in your business, let's talk. Just this one system will do wonders for streamlining and maximizing your sales, and ultimately increasing your profits. 

#3 People 

Now, I give a TON of credit to my Leadership Team for being the kind of people who could run the business without my physical presence day-in and day-out. And this is something that a private equity firm may see value in as well. 

Just like everyone else, they're looking for talent these days - especially the kind of talent that embraces systems and processes, and knows how to IMPROVE those processes. 

Of course, developing a high-caliber team was not an overnight job for me. It took me YEARS to figure out how to attract, identify and hire the right people.

But once I developed my own Recruiting Filtration System, I actually got excited when it was time to hire someone. I knew that with each hire I made, my company was getting better and better, every single time. If you're not investing in your hiring system, I encourage you to start doing that today. 

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And maybe you're reading this and saying, "John, that's great, but I'm not selling anytime soon." My response would be, "That is totally fine."

But if you spend HALF as much time and energy in your business as I used to when I was working 80-hour weeks, you owe it to yourself and your family to create a VALUABLE business.

For starters, we never think a health crisis, financial hardship or legal issue could fall on us, but it happens. And if it does, you're going to want to have the MOST attractive business that a buyer could ever lay their eyes on.

Plus, whether you're interested in selling today or not, you should treat your business like it's publicly traded. Build a business that YOU would want to buy. If you did, 1.) You'll build a phenomenal business; and 2.) If the right opportunity knocks one day, won't it be nice to simply open the door and be ready?  

Focus on the 3 steps above, and you'll be well on your way to building a business that a private equity firm is willing to spend BIG bucks on. 

And when I see you on the beach, I'll buy the first Mai Tai.