Selling our rehab business as a going concern
I am currently rehabbing homes in the New Orleans market and have done so for several years. Our typical rehab is an historic home renovated from the studs out and will sell for between $200-400K. Gross sales in 2013 will be around $3MM. We are running about 34% gross margins and after interest, hard money, investor splits, and expenses we net about half of that for an EBITDA in the $500K range. Here is my question:
Can anyone here share their experience with capital structure in the sense of turning the corner toward making a saleable business out of this? We are not holding properties at this time and are not near big enough to become or sell to a REIT.
In the upstream oil business we would routinely buy mom and pop small businesses for a multiple of EBITDA based on the stability, scalability, and transferability of the revenue. That was generally in the 3-6x EBITDA range and was paid as part cash, part stock or with an earnout. Does anyone know of something similar in this business?
Any and all comments on this would be welcome. I ask because I am planning my exit strategy and also trying to figure out the best way to add equity investors to our equation.
Chris