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M&A activity is trending in the right direction

For operators, 2022 was a mixed bag, characterized by slow progress for much of the year. In this Q&A interview with Bob Tullio, to be published next week in Vending Market Watch, we explored some good news from 2022 – trends that point to a phenomenal 2023 for sellers.

On valuations

Bob: For the most part, for most operators, would you say that their valuations are much higher at the end of 2022 than they were at the beginning of 2022?

Mike: Absolutely - I think we've seen a positive trend line all year. The other thing is that for various reasons, we've been able to successfully push up the valuations from our buyer pools.

Big investment by VBB Advisors

Bob: That is good news for operators. VBB Advisors took some big steps, made a big investment in the valuation process this year. Tell us about it and why you felt it was something you had to do, why was it important?

Mike: I did Bob, and I felt it was important because all too often operators are guessing the value of their business based on some rule of thumb that really has no bearing on reality. If you look at other industries, if you look at larger businesses out there, there's a professional valuation process that's applied to these companies. I felt like it was time for our industry to have that as well so we now have a dedicated valuation consultant on our team.

We provide a professional valuation which includes looking at the business from a financial perspective for asset values, multiples of cash flows and market values. We do a search of SIC codes for comparable transactions from the last 12 to 18 months. Then we also apply any transactions that we know from firsthand experience. The result is a very professional valuation package that really is the foundation of our selling process. We have seen a lot of interest in the operator community.

The buyers in 2022

Bob: Who are the buyers in 2022? Can you give me a rundown on the playing field?

Mike: As always, you have the national companies. Sodexo is a new player in the market having acquired Accent Foods. They're an active and well-funded buyer. Surprisingly, Aramark is back to buying vending in certain markets and as you and I both know, they've been in and out of vending a few times in our history, but they're certainly back. We have some private equity-backed groups that are buying. We've also sold businesses to large regional operators.

Bob: Did anyone get out of the game in 2022?

Mike: What I am seeing is that smaller players are not getting transactions done.

I think to a large extent, it's very difficult for them to get funding. A smaller operator coming out of the COVID period doesn't generally have the financials to support bank financing. Most of them also coming out of COVID don't have the cash to do it on their balance sheet.

The “baby boomer tsunami”

Bob: Did you see that tsunami of baby boomers ready to retire; did that wave start to gain speed and momentum in 2022?

Mike: I'm seeing a lot more inquiries and a lot more listings and these sellers are often 60 to 65 years old. I have one client right now who is 84. If you look at it from a demographic point of view, that baby boomer generation right now is 70 million people strong and it's forecast that their business sales will be the greatest transfer of wealth in human history as these people make a move. Not just in our industry, but across all industries. We're seeing it happen and it is going to make 2023 very exciting.

Why you need VBB Advisors

Bob: Operators are confident entrepreneurs, and I imagine think they can sell their company on their own. I'm sure you hear it all the time. Is it a mistake to go it alone?

Mike: Yes, absolutely. You can sell anything yourself, but will you get the best outcome? Frankly, there's a couple of major reasons why you don't want to do it yourself and the first is objectivity. There is a reason why athletes have agents, comedians have agents, musicians and authors have agents. An objective third party is able to execute a transaction without all the emotional baggage that goes along with being the owner

The second reason: I have done hundreds of transactions, so there's just the factor of experience, knowledge of purchase agreements, considerations of allocation of purchase price. There's a whole multitude of considerations that are often overlooked by sellers. So, that is a big reason why large operators, sophisticated businesspeople, are using VBB Advisors.

Check out the full interview next week at Vending Market Watch

If you are considering a sale of your business in 2023, your timing is excellent. We have a proven process at VBB Advisors that can easily allow you to accomplish your objective before the end of Q1 in 2023. The key to seeing that happen is to start the process now and enjoy the comfort of working with a sell side broker.

Trust is important

As a convenience services operator who has worked hard to build a business, often for decades, there is no reason to feel that deep discomfort that comes from a lack of trust. Is your broker favoring the buyer or the seller? That’s hard to say, but you’ll be asking that question long after the deal is finalized.

VBB Advisors – A sell side broker

You deserve better. The choice is simple. Work exclusively with the industry’s most experienced sell side broker. At VBB Advisors, we cringe at what “two sided brokers” like to say – “There has to be some pain from both sides in order to make a deal.” That is nonsense. As a seller, you should be feeling comfortable and confident that you received the best deal possible – a deal that was reached by putting our proven process to work.

Our Philosophy at VBB Advisors

“No matter what is going on with the economy or the world, it is time to sell your business if you are ready and we can make the right deal - a deal that makes sense for you, your family and your company.”

Buyers come to us because they know that we serve sellers who have thoroughly and thoughtfully considered their exit strategy with our help. That is the type of seller that you want to be – a seller who has their ducks in order, has taken steps to make their business as attractive as possible and a seller who values their employees enough to make a deal that everyone will feel good about.

Take that critical first step. That is often the toughest one to take. Order our free Exit Strategy Planner. At the very least, it will provoke some thought, and this is a good time to think about your future.

Whatever your reasons are to sell your company - the timing, a sense of frustration, the desire to enjoy life or an interest in rewarding yourself for years of hard work – VBB Advisors can help you realize your goals.

I am Mike Kelner, the leading sell side intermediary in the convenience services industry. Let’s sit down and have a conversation. Use this appointment scheduler to set up a meeting with me.

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