As the portable restroom rental industry steadily continues to grow at its impressive rate, investors pursue the lowest price on any business they consider. That means operators looking to sell increasingly need guidance on maximizing the sale value of their businesses. ALW is fortunate to meet with Damon Powell, Founder & President, FMC Advisors, LLC, Orlando, Florida, the industry’s leading portable restroom rental business advisor. Powell and his team have closed over 170 transactions of this type and have others currently underway.
The FMC leadership team, Powell and his partner, Ed Medvic, are both veterans of the industry, and due to increased demand for the service, Andy Pridgeon joined FMC in 2023. Damon reflects, “I was drawn to continue in the industry because of the people I had grown to love working with through the years, the salt-of-the-earth blue collar atmosphere and work ethic. Just that sort of clear and honest working environment.” After a long career in upper management with United Site Services and Waste Management, I took on my current role about five years ago.
Here, Damon shares with ALW readers the general processes of brokering sales of portable restroom rental businesses. As he explains, it’s an involved proposition, including asset evaluation, marketing without advertising, multifarious business analyses, and an extensive series of other steps for positioning property and businesses for sale in this unique industry.
We will further look at the prospective buyer’s parallel process of assessment and due diligence, including accounting reviews, physical inspections, etc. We’ll also learn about FMC’s approach to vetting prospects and managing the valuating and positioning of businesses for sale in the team’s step-by-step process toward closing. We’re most excited about learning these experts’ proven process of preparing portable restroom businesses for sale with focus on maximizing the sale value of the business.
Damon Powell emphasizes that the key to the successful sale of a business is in the preparation for presenting it to prospective buyers. His group works with business owners to help them understand what they need to do to set themselves up for their businesses to be sold in the future. From here, he offers some valuable insights and advice directly to ALW readers:
FMC Advisors’ Liquid Waste Business Sales Track Record
In earlier years, I had recognized the need for industry-specific guidance for business owners to sell their companies and get the maximum value for them. The need is even greater now. Our mission today is to assist sanitation business owners in getting maximum value when they sell. Liquid waste companies are now bombarded by investors or proxies, and those agents know how to utterly minimize their costs. That’s why the valuation process is so important for sellers.
As transaction advisors, we know how to help any type of company in any industry make the most of selling, but we ran these types of businesses (liquid waste handling); we ran them and sold them. As a buyer for United Site Services, I evaluated hundreds of businesses around the country. The transactions my team and I have completed total nearly a billion dollars in value.
The popularity of the liquid waste industry, the reason why it’s so popular with investors, is that it’s an attractive opportunity for private equity investors due to its recurring revenue model, diverse customer base, and fragmented industry dynamic (meaning there are thousands and thousands of independent operators.) It’s an aggressive growth industry. Acquisition is more accessible than in solid waste management, for example, where the cost of doing business is higher. For example, the trucks are more expensive, the waste containers are very expensive, etc.
In this industry, the rental toilet units have a long life, the trucks are much cheaper, and so on. So, it’s much cheaper to get into and, overall, the capital expenditures are lower, making it less costly to maintain competitiveness over time. Naturally, regional and other industry players reach out to acquire smaller operators, who need their own valuation experts.
Determining the Sale Value of Your Business
We look at five essential points for valuation. 1) We consider the location, which dictates a fair amount of a business’s value. 2) We examine the amount and quality of revenues, and 3) we determine the profitability of the business. 4) We look at the quality and age of the assets. For example, regarding the age of assets, a business may have a $2 million market value, but let’s say the assets are older, trucks have not been replaced in 4 years, etc.
The new owner knows he will have to replace trucks on day One to have a quality operation. That’s $200k out of pocket upfront, a potential deal-breaker. He will need to take that $200k off the purchase price. So, going in, the seller needs to decide whether to stop buying trucks before undertaking to sell or keep doing what he’s normally doing in running the business. My advice is to run the business like it’s yours until it isn’t. So, a buyer is stepping into the company that is already operating like it’s going to be run for the next 5 to 10 years.
5) We further look at the business’s growth trajectory. Has the company been growing? If so, by what percent per year? Has its growth been stagnant? Declining? We’ve sold portable restroom rental businesses in all financial conditions. Some have been flat in terms of growth. Some weren’t turning a profit, and some have been on the verge of bankruptcy. Valuation is commensurate with the state of the business.
Liquid Waste Business Positioning & Sales Process
One of the main reasons we started the consulting service is to help operators figure out what their business is really worth at the time they are looking to sell it. When we were buying businesses, the owners had a sale value in mind, and nothing was harder as a buyer than telling them, for example, when they thought their business was worth $10 million, that it was actually only worth $2 million.
We do a lot of valuations. It’s important to help people know what their business would be worth at the time of sale if they set a reasonable future date and take the practical steps necessary to raise its sale value as much as possible by that time. Here’s a roadmap to that objective that operators looking to sell might think about.
STEP 1
Obtain a professional sales valuation. We provide a valuation that includes an assessment of the assets (what the buyer will get), a comprehensive financial review including owner add-backs, discretionary earnings, extraneous expenses the owner may run through the business, etc.
We go further to weigh the potential benefits for the seller of predictable synergies of merger or acquisition, when a larger company buys a smaller one. The cost savings from which the seller may benefit may enable him/her to adjust the purchase price based on such anticipated gains, so we can provide a final valuation that represents future benefits in the estimate of what the business is worth in today’s valuation.
STEP 2
Determine the right time to sell. We want to help business owners as they decide when to sell, and help them learn how the process works. A business owner in any industry should really use an advisor, broker, coach to walk them through the process. You’re much better off with someone who has completed transactions for the sales of companies, is familiar with valuations, and has a competent buyer pool, attorney, and other critical experts. That way, you can run your own business without as much distraction while the work to sell it is underway, and you can take the emotions out of the process and the transaction.
Selling a business is hard. Especially for sellers who’ve had a bad experience in the past, it can be a rough ride. I’m always glad when I get calls from business owners asking what steps they can take if they want to sell their businesses in one or two years. It means they’ve already learned some important things about selling.
STEP 3
Prepare for the sale. Take the right steps to raise the sale value of the business. Prepare for the buyer’s fact-finding mission. Use the most effective tools for maximizing the sale value of a business of your type. That often means considering a new or updated operating software platform. There are many good platforms for routing, tracking operational metrics, etc.
If you can start tracking metrics, like miles per route, stops, minutes per service, etc., you can maximize the value of that data, and show you understand and take care of such details of the business. It goes to how well you’re managing the business.
STEP 4
Identify the right buyer. At FMC, because we’re very specialized and we were buyers in the industry, nearly every buyer reaches out to us so they can be considered when we bring companies to market. Of course, as I mentioned, location matters. A business near downtown Atlanta vs. a small market in North Dakota can expect to attract more interested buyers.
We have cultivated a comprehensive nationwide database of buyers, from private individuals to billion-dollar enterprises. We vet the buyers, so when we work with a seller, we can ensure that there are no time-wasters or “tire-kickers” that browse or can’t qualify.
STEP 5
Prepare the financials. If there’s no succession plan or family member to take over the business in the future, it’s strongly advisable to work up a set of good financials that reflects a solid accounting of the financial results, at least for the past few years. QuickBooks is a good resource for generating easy Income and Expense Reports, P&L Statements, Balance Sheets, tax returns, etc. In most cases, it is easy enough to put them together monthly. Your CPA can help you.
Most buyers will look deeper into those financials. Then, buyers will perform their formal due diligence. They’ll carefully examine P&L, revenues, assets, bank statements, sales tax records, loan account records, liens, and other information revealing the business’s overall financial condition. A buyer needs to understand what the true financials are. The process can take 30 to 60 days.
This is the last phase prior to closing. It’s essential that sellers do not deliver raw balance sheets and raw Profit & Loss statements to prospective buyers. In our industry, those can be very good, or reflect very poorly. When sellers work with us, they are cleaned, up, adjusted, and presented accurately, whether it’s a strong company or a fixer-upper.
Ready for Closing
Once all the financial preparatory work, due diligence, and negotiations have been done, the closing date is set. If you have provided high-quality data and information, your buyer can proceed confidently with the transaction. The process can be expected to run much more smoothly from start to finish when working with a skilled advisor, experienced in dealing directly with buyers, guiding you through each step of selling your business.
Current Business Sales Opportunities in the Industry
Opportunities in the marketplace for selling portable restroom rental businesses are currently wide-ranging, in Damon Powell’s view. This estimation is per FMC’s extensive roster of qualified prospective buyers, developed through his team’s years of cultivating their industry-specific base of corporate acquisition agents, private buyers, and business investment associates. Damon continues:
Most sellers don’t want to advertise that they’re selling. Buyers can ask for any information they want, and if a business owner has never sold a company before, he/she may think the request is reasonable. Whereas, more careful management of that encounter calls for more thought before answering. If we were involved in that scenario, we’d get confidentiality agreements ahead of time. Confidentiality in every transaction is our top priority.
Word can quickly get around that a business owner seems likely to sell for a very low price. Maybe someone approached you. Maybe the two of you even come to agree on price and sign a letter of intent. But, finalizing a successful sale of your business requires that you have made the most of this critical opportunity to maximize your company’s sale value and your return on your investment of your money and years spent building your business.
Owner Exit Strategies That Maximize Sale Value
There are proven techniques that can be used to sell a portable restroom rental business or other liquid waste handling business for its maximum assessed value. One proven approach is to optimize your exit strategy as part of your selling method. The question becomes, “What is the ideal exit strategy for the seller? Does the seller want to stay on and continue to run the business or step away?
Helping the business owner understand his/her array of options and what they entail is important for owners who’ve never sold a business. To help ensure they realize the maximum sale value for all their work to develop a functioning company. That strategic knowledge is a benefit of seeking advice on what is realistic for them now and/or at a future point they may choose to follow through with the sale.
- Asset or Stock Sale Structures
These are options of sales transaction structures in which sellers may permit buyers to purchase the business by asset sale or stock sale. In an asset sale, the new buyer is just purchasing assets, not the going concern. Asset sales are typically preferred, and FMC estimates that as high as 95% of all sales of businesses in the industry are asset sales. In a stock sale, the buyer takes on any trailing liabilities that the company has ever had.
- Cash or Financing Sales Structures
Other transaction type options involve all-cash or including financing. With these alternatives, sellers determine whether it is best for their interests to take all the money from the sale at closing, or to include some amount of owner financing. We defer to tax professionals in this area of consideration. Then, we translate the outcomes in terms of pros and cons over the short- and long-term for sellers, and help them understand the structural options and the net benefits / detriments of these decisions.
- Equity or Asset Sale Structures
New buyers may use private equity, family offices, or other alternatives to traditional funding. A seller may opt to maintain some percent of equity in his/her company. For example, he/she might choose to maintain a 30% interest and stay on with their business becoming a division of a larger organization. Or, the owner may choose to step away entirely at the time of the sale. Maintaining a financial interest can be a great advantage. If, for example, the business is resold in another 3 to 10 years, it could be worth more than the original sale price.
Whether you keep stock or equity in a business you sell, or to walk away with your sale proceeds should depend on factors including your long-term financial goals, tax deferral savings considerations, synergistic alignment of your interests with the company’s, your risk tolerance, and personal preferences. Before making this pivotal decision, you should consult with your tax, legal, and financial advisors.
Educating Business Owners On How to Sell at Max Value
We’ve only been able to glimpse the broadest overview of Damon Powell’s FMC process here. His is a very broad field of study. Not only is Damon Powell’s team the only group of expert industry advisors specializing in positioning and selling businesses in this unique rental service class, the FMC site is the premier business sales site for the portable restroom rental services industry and the larger liquid waste handling industry. In other words, it’s the place to go for connections with appropriate prospective buyers for your business.
Integral to the mission of FMC is elevating the knowledge of business owners throughout the American liquid waste handling industry. From the advisory firm’s first day in operation, the FMC professionals have been providing workshops and training sessions on business valuation for members of the Portable Sanitation Association International (PSAI) through the association. The association sets standards and provides guidelines for the industry. FMC provides educational opportunities through the PSAI as well as FOWA (the Florida Onsite Wastewater Association), and under the advisory team’s own auspices at individual business owners’ operational sites.
Damon Powell notes: We will continue to do that and educate business owners one-on-one on the particulars of maximizing their businesses’ sale value. For example, we’re helping them understand the financial metrics they should be developing and that buyers will be looking for. We want to help them better understand what the industry averages are that their portable restroom rental or liquid waste hauling operations will be compared with and what they can do to increase the value of their business and grow it to that number.
2025 Industry Popularity, Buyer Availability and Objectives
Damon Powell, Ed Medvic, and Andy Pridgeon, the professional advisory team at FMC, are transaction advisors who have dedicated their careers to helping operators sell their portable restroom and liquid waste businesses. The group benefits the entire portable restroom industry by offering a clear track for learning how to sell a business for its maximum current value and set up a business to build value for future sale.
FMC further serves as a vast networking hub connecting business owners with current prospective buyers. It’s fair to say that the FMC group’s track record certainly has proven to support their simple but powerful company motto:
“Experience Matters, Real Results”
For more information about FMC, contact Damon H Powell, Founder & President, FMC Advisors, LLC, at (407) 765-9440, or email damon@fmcadvisors.com, or visit www.fmcadvisors.com.
Upon request, the January issue of ALW containing this article will be distributed free of charge to attendees of the 2025 WWETT show!