Last month’s article hit a nerve with some operators. We reviewed several reasons that operators use to explain why they are not selling. “What are you waiting for?” I ask. In fact, the article fired up some new business relationships – operators who are now ready to start the selling process with VBB Advisors after realizing this is a fantastic time to make a move and a bad time to make excuses.
The list of excuses we addressed last month:
“I’m waiting to see if family members might want to take over the business.”
“I’m waiting to get more return on all of my technology investment.”
“I’m waiting for more employees to get back to the office.”
It is now one month later, and the M&A activity has not let up. Instead, the analysts we have spoken to are projecting a heavy flurry of activity in Q4 of this year. Call me to talk about the latest deals.
What are you waiting for? Here are some new additional excuses not to sell. Do any of these excuses sound familiar to you?
“I’m waiting until some of my key people retire, because I want to be sure they are taken care of.”
Caring about your key people, the loyal employees who helped build your business is very noble and quite decent. Keep this in mind: The buyer needs your key people because great employees are always in demand.
A change of ownership – a different owner with a new approach, can be energizing to your long-time employees. Regardless, you can protect them. At VBB Advisors, we negotiate employee protection clauses with almost every deal to ensure that the buyer retains key employees for a certain period on time. Worrying about your key employees is not a reason to back away from selling your business - if the time is right for you.
“I’m waiting for a time when I’m less busy – selling is just too much work right now.”
A good reason to sell your business is that owning the business has been too much work for too long. The workload is only going to intensify as you continue to grow. The selling process at VBB Advisors is a process that does not happen overnight. Selling a business takes time and planning, but our process is designed to allow you to continue running your business. Selling your business is work, but we do the heavy lifting! The first step is a proper valuation of your business – a good reason for us to have a conversation in the near future.
“I’m waiting for interest rates to come down.”
On the surface, interest rates would seem to be a good reason to hold off on selling your business. After all, who can afford these high business interest rates? There are several ways to answer that question.
As a Wall Street Journal article pointed out recently, “For companies that need to borrow money these days, it pays to be big. The Federal Reserve’s rate-raising campaign has put a notable crimp in financing for companies with smaller payrolls and valuations. The average rate for a loan from the U.S. Small Business Administration, which historically costs less than a bank loan, has reached double-digits, driving many small firms to borrow less. For companies with big balance sheets and lots of employees, it is a different story. Large companies are adding to the historic borrowing rush.”
Fortunately, the buyers these days in our industry are typically big companies who understand that while current business interest rates are higher than they were, they are coming off historic lows and are nowhere near historic highs. For the hungry buyers – and there are plenty out there – interest rates are still at a reasonable level.
“I’m waiting to see if I can land a few huge accounts that are pending.”
I get it. You don’t want to leave anything on the table. You have some nice pending business coming down the line and you want to be paid for it. I can’t blame you, especially with the incredible multiples that sellers are enjoying today. The numbers can be staggering and for many sellers, quite surprising.
Fortunately, when you have VBB Advisors on your side, you can get paid for business that comes in after the sale has closed. Just identify the pending accounts by name and when the deals close – with or without your help, they can be factored into the final, adjusted selling price. Just as a buyer wants some protection for business lost in the short term, the seller deserves to be rewarded for new business that you cultivated; business that ultimately came to fruition shortly after the sale.
When we negotiate the deal – we will build that protection in for you – along with many others.
Bottom line – Valuations in our industry have never been this high, which brings us back to the question: What are you waiting for?
The waiting is over. What is beginning to emerge is a growing line of sellers who are ready to step up to the table. Combine the currently ravenous appetite of buyers with a fresh inventory of sellers and we have what can only be called “a perfect storm” for M&A activity.
Here is the question: Are you ready to get in on the action and capitalize on this window of opportunity for sellers? I have signed several new clients recently that fit the seller profile that I am seeing on a consistent basis. They have been in business for over thirty years, often covering two generations. The owners are in their sixties, have worked hard and simply want to enjoy the next chapter of their lives. They want to spend more time with their grandkids. Does that sound like you?
Take that first step
Buyers come to me because they know that I serve sellers who have thoroughly and thoughtfully considered their exit strategy with my 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 my free 2023 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.
Or – give me a call at 704-942-4621.