Building Management Systems Company
Location
Industry
Business Broker
Situation
The owner of this business was the engineer and the brains behind the company’s patented technology that installs building management systems to enable efficient utility consumption. Revenue streams included system installation, monitoring and annual software updates. Monitoring services maximized heating and cooling efficiency through the company’s proprietary system comprised of sensors, software code and specialized thermostats. Monitoring capabilities included pinpoint identification of equipment degradation and failures for efficient servicing. While the owner loved software engineering, he wanted to rid himself of the day-to-day management responsibilities to pursue teaching while continuing to work on his pet engineering projects.
BayState Business Brokers’ Approach
Brian Labonte worked closely with the business owner to identify the business drivers of the business and to package the significant upside the business offered to prospective buyers.
The market opportunity was vast given the system was applicable for businesses with at least two heating and cooling units on the roof that were interested in reducing utility costs by optimizing its building management systems. The owner and lead software engineer was in the process of bringing a new system to market that included advanced capabilities. The new release presented significant market opportunities for prospective buyers, including expanding into other markets. Additionally, the new system extended patent protection of the software for many more years.
As Brian prepared to market the business, the new technology, extended patent protection and potential additional future enhancements to the software all affected the price and the negotiation of terms of the sale. Supply chain considerations were also paramount as a new essential international supplier was being secured to solidify sourcing.
Prospective buyers were attracted by the business’ patented sensor technology and the expanded market opportunity of the soon-to-be-released new system. Many prospective buyers were identified, but the complexity of the technology and its business proved challenging for some buyers to comprehend which translated to challenges in securing financing with their banks.
Two software engineers from Sri Lanka emerged as interested and committed prospective buyers. The two partners, one living in the United States and the other living in Sri Lanka were especially interested and readily understood the business given their backgrounds. The partner living in Sri Lanka owned a business focused on agriculture that also leveraged sensor technology. The prospective buyers understood the technology, the value of the patent protection and the market opportunity to expand the system to serve other industries.
To reiterate their commitment to buying the business, the buyer living in Sri Lanka relocated his family to the United States as the negotiations progressed and hired a general manger to run his agriculture business.
The financing process was challenging and time consuming and after the buyers found out that their bank would only fund half of what they had asked for, Labonte stepped in to reintroduce his banker to enable the deal to happen. Financing was secured and the next hurdles were negotiations of the lease terms of the existing building and final negotiations of how engineering R&D would be finalized in the deal terms.
From start to finish over 18 months, Brian Labonte quarterbacked the process to secure a sale for his buyer and to have the two software engineers acquire the business.
Results
The engineers acquired the business in Westborough, negotiated a new lease in a new location and moved the business. Their primary client is pleased with the new location and new ownership and the new system release has been rolled out. The seller is happy to focus his time and energy on his pet engineering projects and is pleased to have found software engineers that understand the business’ potential and market opportunity for growth and success.
What Our Clients Say
After 12 years running the company…I wanted to sell. After evaluating several business brokers, I selected BayState due to their reputation and experience. When we accepted the final buyers offer in early 2023, the business banking community was in an uproar…Brian Labonte stepped in with his contacts and made it happen. Without him I don’t think the buyers would have been able to…complete the purchase. I recommend BayState Business Brokers. They are professional, well organized, and supportive.
Paul Laskow
Seller
