How to Exit and Sell Your Painting Company

Added: 2026-05-26

[00:00:00]Private equity is devouring the trades.

[00:00:01]There is endless capital that needs to be deployed, and in the age of AI and robotics, the trades are a primary target, and painting is one of the last frontiers. It's one of the only trades left that has not been viciously attacked by private equity. And as Tony Robbins always says, Most people don't run their business in a way where they can legitimately sell it. They have no exit strategy, and they'll go away. And it'll make you run your business differently if you run it where it's possible to sell it.

[00:00:27]If you don't, you're going to run it like something that's not a business, and you'll never grow anything. Without an exit strategy, all you have is a job, an expensive job. So, in this video, I'm breaking down a road map for building a business with an exit plan, so you're ready for the onslaught that's coming.

[00:00:46]Your painting business probably isn't worth anything to [music] an investor.

[00:00:50]So, let me break this down. Most painting companies right now will value for somewhere between 1 to 3x EBITDA.

[00:00:57][music] EBITDA is a fancy word for net profit or your total income from the business. So, if you're making $200,000 a year, you can sell your painting business for somewhere between $200,000 and $600,000 a year, >> [music] >> which isn't much. For most people, it's like, "Well, shoot, I'll just run the business for a couple more years then."

[00:01:17][music] Exactly. Your painting business probably isn't worth anything to an investor. The reality of selling a painting business is that [music] most painting companies will value and sell for a teeny, tiny multiple on EBITDA of two to three times EBITDA of the last 3 years average. So, let me tell you what that actually [music] means. What we do is we take the last 3 years of income in the business. So, let's say you made 100,000, then 150,000, then 200,000 in profit. [music] That means the average of the last 3 years was $150,000.

[00:01:50]So, we take that 150, and we can sell the business for two to three times that number, meaning [music] 300 to 450,000.

[00:01:58]But last year, you made 200,000. So, you're like, "I'm not going to sell this business. I just made 200,000 to for 300,000. Probably won't even sell for 450,000." And that's why you're not going to sell the business. But that's also why no one's going to buy the business is because it's not worth anything. [music] People don't want to buy your company because they're not buying anything. There's not an asset there. They're basically buying your job.

[00:02:18]>> [music] >> So, effectively, they're buying the leads. They're buying the leads that are coming into the business from your organic marketing and repeat business, which isn't worth much.

[00:02:32]Now, by the end of this video, I'm going to tell you what you can actually do about this to make your company sellable, so that it's actually [music] worth selling. There are 11 big factors that create enterprise value and actually make your company sellable and at a multiple you'd actually want [music] to sell at.

[00:02:49]So, when we're talking about selling a company, the game is increasing your multiple. Your multiple is the number that they're going to multiply your EBITDA or your earnings or your profit.

[00:03:01][music] So, your company is making $500,000 in profit, we could get a three times multiple where you're going to sell for 1.5 million. We want to get that from three to five to six to eight.

[00:03:12]We want to increase [music] the multiple so that you're getting paid a bigger amount of money for the same [music] profit on the business.

[00:03:20]These are the 11 ways that we can do it.

[00:03:22]There's value, which adds to value.

[00:03:24]There's risk, which takes away from value. [music] There are six things that add to the value of the business. Your revenue, profit, your revenue growth, your yearly revenue retention, your profit margin, and your lifetime value to cost of acquisition ratio.

[00:03:40]>> [music] >> And then there are five things that decrease the value of the business, which are all risks to the investor.

[00:03:46]That's [music] key man risk, client risk, channel risk, market risk, and then your data and infrastructure.

[00:03:55]Revenue. Nobody wants to buy a million-dollar painting business. The big guys, the ones that'll actually pay you a lot of money for your business, they have no interest in buying a tiny little million-dollar painting company.

[00:04:04]>> [music] >> You've got to get that business up to 3 million, 5 million, 10 million dollars a year. 3 million is just like your ticket in the door. [music] And this is a big reason why private equity hasn't attacked the painting industry because there's not that many companies in the painting industry that are worth [music] buying yet. Total profit matters. So, if I'm an investor, I would pay a lot more money for one company that makes $5 million in profit per year than I would want to pay for 10 companies that each make $500,000 a year. There's a lot more risk and a lot more work and a lot more headache with all these different companies versus the one company that's making the same total amount. [music] I don't want to have to go through 10 different deals just to get to $5 million when I could do one deal for $5 million. And so, the total profit your business actually makes, the bigger your business actually gets, the more [music] it's going to be worth and the higher multiple you're going to get on the business. Revenue growth. Nobody is buying a business that's not growing.

[00:04:56]Nobody wants to buy a business that's on the decline. People are literally buying your business for the growth. They're buying it here because they think they can get it to here. That's the gap that they're going to make their money on.

[00:05:08]And so, if your business isn't growing and you're stuck, [music] and so you're like, "I want to sell this thing and get some money out of it, but it's not growing," then someone else is going to look at that and be like, "This doesn't look like a very good business.

[00:05:21]It's not even growing. I'll buy it, but I'm not buying it for much." And so, you've got to create a business that's actually growing and attractive to an investor. People want to see the line going up so they can extend that line and assume it's going to keep going up because that's where they're getting all their returns. [music] Yearly revenue retention. This is a harder one for painting contractors because a lot of our clients are residential clients that don't paint that often. And so, we're not getting a lot of like repeat business. [music] We don't have a lot of service contracts. If you go look at, you know, the HVAC business that's been totally taken over by private equity, they have all these service contracts and all this recurring revenue, which is really nice, and they keep their customers like for life. Harder in the painting business, but there's a lot of things we can do to improve this. So, one thing is we can massively [music] increase the rate at which we get referral business and repeat business.

[00:06:11]We can also do a much better job expanding our professional network so there's more expected business coming in through professional relationships, and we can also scale and launch a commercial division in the business where there is repeat, [music] consistent, predictable revenue coming in. Profit margin. Most companies operate at a 7 to 12% profit margin. We talk to hundreds of painting contractors every single month, and we talk to a lot of them that are doing between 1 and 2 million dollars a year, and they're not making any money. Nobody wants to touch that [music] business because a business that's not making a healthy margin at scale just means a couple misses in that business is actually losing money.

[00:06:51]Investors want to see healthy [music] profit margins because that's what they're in the business for.

[00:06:57]Most companies [music] are making 7 to 12%. You need to get your company much more profitable where you're hitting more like 20% profit margins, and that's going to increase the EBITDA because that looks like a much healthier business. So, as an investor, I'm willing to pay more for that business. LTV to CAC ratio. This [music] is a metric that tells an investor how efficiently you can turn marketing dollars into revenue. And so, if you have a really healthy LTV to CAC ratio, an investor sees that and says, "We can spend a lot more money on marketing and drive the revenue up." If you have a very weak LTV >> [music] >> to CAC ratio, which means lifetime value of a client and customer acquisition, so simplify this a little bit. We say, "Hey, we're spending, you know, $1,000 to get a $10,000 client."

[00:07:47]What's much better is someone who can spend $500 to get $10,000 in revenue because there's much more room to spend money on the marketing to drive more revenue.

[00:07:57]The way that you increase that ratio is [music] you get better at marketing, so you're driving down your marketing costs while increasing efficiency. You get better at sales, so you're driving up the revenue you get per estimate you do, which spreads the gap between lifetime value of a customer and your CAC. What also increases lifetime value is more referrals, more repeat [music] business from those clients that you serve, which has everything to do with your customer experience.

[00:08:23]As we get better with marketing, sales, and customer experience, the gap [music] on LTV to CAC increases, which is attractive to an investor. If that gap is too small, [music] it's not worth much to an investor because they don't see that they have the levers to pull to increase and grow the actual business.

[00:08:41]There are five big risk factors that an investor is going to look at before buying a business, and we'll save [music] the two most important ones for painting contractors for last. First one is key client risk. Is there a risk that you just have a couple of big accounts?

[00:08:52]So, this doesn't apply a lot to residential painting contractors because we generate [music] our revenue from tons and tons of clients, so we actually have massively diversified risk in this way. If you're a commercial painting contractor, and let's say, you know, you get $1.5 million in business a year from one client, and then you get another 1.5 million from 10 others, that's a big risk because if we lose this one client, the business cuts in half. Investors don't want to see that. That doesn't apply a lot to a residential painting contractor. The next one is key channel risk. Also probably not a huge pain point for many residential painting contractors. Key channel risk is referring to marketing. It's where you're getting all your customers from.

[00:09:31]So, let's just say, for example, you were generating 90% of your business from just your website and SEO. That is risky because if anything happens to your Google profile or somehow the ranking gets changed, your business can drop drastically because you're so reliant on that one thing. The same would be true if you were really, really heavy on Facebook ads or really, really heavy on, you know, fill in the blank.

[00:09:54]But we You to have a nice diversified marketing mix, so that reduces risk for an investor that any one marketing channel could really disrupt the business. Facebook is a really great example right now. A lot of people are scaling their business on that, but if that's all you've got, you're in trouble because what if something happens with Facebook [music] and an algorithm change and suddenly you could have a 20 or 30% drop in the business because of something that happened on Facebook.

[00:10:15]Next up is market risk. And this is actually why the trades are so popular right now because almost every industry out there right now has substantial market risk. What that means is is this market going to disappear, right? The age of AI coming, it is disrupting a lot of different industries, robotics is coming and is disrupting a lot of different industries. That's why there's so much of this money redirecting towards the trades because so many other places where private equity can deploy its capital, they see way too much market risk. They're like, "I don't know what's going to happen there. I don't want to go and invest 10 or 20 or 50 million dollars over there because that looks sketchy. [music] Let's go over here where there's less market risk."

[00:10:55]So, we're in pretty good shape and that's actually what has made these industries so attractive to investors.

[00:11:01]These are the two biggest risks to investors that you need [music] to fix if you ever want to sell the business.

[00:11:07]The first one is key man risk. Are there any critically important people in the business that if they went away, the business would be in trouble?

[00:11:13]That's probably you. Can you [music] take a month off of the business and the business does the same without you?

[00:11:21]The answer is probably no. And if you can't just leave the business and it runs, then you're a risk [music] and an investor looks at the business and says, "Hey, if that person's gone, does this business stand on its own?"

[00:11:34]>> [music] >> And if the answer is no, then there is massive key man risk. And in a lot of companies, that is just a straight-up deal breaker. Like they will not buy the business. They'll basically buy it for the lead flow, but everything else is too risky, they won't touch it. So, you're going to need to build and create a leadership team and a functional company that can truly operate without you. Number two is data. If your business is a mess, nobody's buying it.

[00:12:00]If your financials are a mess, nobody's buying it. If your CRM is a mess, nobody's buying it. And [music] most painting companies are a mess. You need to have an impeccable CRM that's tracking all of your customer information. You need impeccable financials that's auditing and accounting for every single transaction and every penny across the business. And you need a system in place that is auditing and cross-checking your CRM with your bank with your business plan on a weekly basis so there's integrity in the whole business. Without this, >> [music] >> it is too big of a mess and I can't trust any of the other numbers in the business that would make me comfortable buying the business.

[00:12:41]Even if you [music] don't want to actually sell the business, building a business that you can sell is valuable because you've created a much more valuable business for yourself [music] where you're not required for the day-to-day. You're making a lot more money, the business is growing, you have more revenue retention, and all [music] the things we went through makes the business more valuable for you.

[00:13:01]But the reality is that trying to do all [music] of this on your own is a monster task. And if you try to do it all by yourself, it probably won't get done or it's going to [music] take absolutely forever and you're just going to be left in the dust by people who aren't trying to do it all on their own. So, this is what we do >> [music] >> at Painting Business Pro. We run our own portfolio of painting companies where we're building all the infrastructure, all the playbooks, all the leadership to make our own company incredibly valuable. When you work with Painting [music] Business Pro, you get plugged into everything that we're building at our own companies. We first help you get to $700,000 a year with healthy profit and a healthy [music] stable business.

[00:13:44]Then we help you get all the foundational infrastructure in place [music] so that you can actually build a team, all the playbooks, all the financials, the tracking, [music] and getting everything right. And then we plug you into all of our playbooks for recruiting, training, onboarding, developing leadership [music] with your core team. Once you do that, now we're going to actually help people start [music] to exit the business and there's a few ways that we're going to do that.

[00:14:08]One way we do that is we actually buy in a minority stake in your [music] business and partner with you to grow your company a lot faster and a lot further. Maybe it's 5 million a year, 10 million a year, 50 million a year, however far you want to take it [music] before we make a majority investment in the business, which is up to you when that happens. That's one way you can actually exit the business. Another way that we'll be helping people exit the [music] business is actually helping you make the company sellable and getting much more involved with leveling up all these things that add value and removing the things [music] that create risk to increase the multiple that you can actually get in the business. For years, I've said our mission is [music] people create freedom, discover what's possible, and build a company people love. I've always said how we fulfill that is we help you build a $3 million company where you've got a team running the day-to-day so you can make 600,000 a year and you can have a 15-20 hour work week. And for most people, that is a dream come true. But the truth is that real freedom, real freedom happens when you can exit the business and be making enough money from your exit that you never have to work again.