BUSY MERGER & ACQUISITION ACTIVITY PROJECTED FOR 2022
In a recent Webinar sponsored by Mondelez International, a distinguished group of operators were bullish about the prognosis for our industry. If those operators are on target, 2022 will be one of the biggest years ever for M&A activity. Will you be ready?
The Webinar, “Exploring Pantry Service for 2022,” featured Malcolm McAlpine from Mondelez, Judson Kleinman of Corporate Essentials, Mike Kelley of Burdette Beckman, Kimberly Lenz of Associated Services, Tammy Stokes of Five Star Food Service and was moderated by Nick Montano of Automatic Merchandiser and Vending Market Watch, along with Bob Tullio of Tullio B2B, who interviewed the panelists. Just register and you can view the Webinar.
Some industry data to consider
In addition to a positive view toward the 2022 business outlook by the operator panelists, a presentation by Malcolm McAlpine from Mondelez, provided the following data-based industry update:
General Foodservice Insights
The entire industry is expected to recover to near pre-pandemic levels by 2022.
Vending and micro markets are leading the post-pandemic rebound and operators are expected to see a 64% growth in 2022 over 2020.
46% of consumers are snacking more than ever.
Micro Markets sales are expected to recover the fastest and are expected to outpace all other convenience services through 2025…at the expense of vending.
More than 85% of operators say they definitely think the micro market could replace manual foodservice.
Vending won’t reach 2019 revenue levels until 2024 or 2025.
Impact on M&A
What does this mean from a M&A standpoint?
It means that once revenues begin to rise, M&A activity will be blazing hot. I base this prediction on two key factors, many of which I discussed with Nick Montano of Automatic Merchandiser and Vending Market Watch, in a Q&A session that was published on December 1st.
1. The amount of inquiries I have received from prospective sellers (and interested buyers) in the past 60 days).
There is a lot of interest out there right now from both buyers and sellers. I was recently asked by a seller if there was a good reason to sell right now. My answer: “That depends on your situation of course, but ideally, it makes sense to work on building your operation, focusing on profitability and allowing revenues to normalize a bit.”
Several operators are thinking along the same lines which can only lead to a huge amount of M&A activity by Q3 of 2022.
2. The inevitable market condition – that tsunami of baby boomers that I have been talking about for the past two years.
Q: What is your estimate of the number of operations that were unable to be sold in 2020 because of the pandemic?
“That’s difficult to say. I do know a number of operators that were planning on selling and decided to wait. Additionally, I was personally involved in three transactions that were tabled as a result of the pandemic.”
Q: For those owners who were unable to sell in 2020 and 2021, what changes and enhancements should they make to attract buyers? This is a three-part question for each sector: (1) vending, (2) micro markets and (3) OCS. Provide a little detail for each, separately.
“Generally, regardless of sector, buyers are seeking strong recurring revenues with consistent gross margins coupled with growth opportunities.
In the vending channel it is important that operators are up to date with their technology. This eases the acquisition process for the buyer and is indicative of a well-run business. Customer contracts while often eschewed by operators are important to buyers.
The micro market operator needs to deliver strong, consistent gross margins. The variables of fresh food waste and shrinkage need to be managed and tracked. Again, contracts provide a buyer with an element of security regarding the ongoing business.
OCS faces other and perhaps more daunting challenges. A buyer needs to demonstrate a plan for recovering sales. The business needs to be scaled to the new levels of on-site employment.”
Check out the Webinar.
Check out the Q&A article.
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.”
My philosophy is driven by the fact that I do not represent buyers. I represent sellers. Operators just like you. Please consider what that means for you. I am not interested in just making a deal. I will not be jockeying from one side of the table to the other. I do not subscribe to the idea that a deal requires both sides to feel a little pain. As the seller – you know what you need to receive to move on, to retire, to go in a different direction – comfortably.
We never lose sight of the fact that there is more than one buyer out there for your business. This is a defining characteristic of a “sell side broker.”
That is why I offer free resources like the 2021 Exit Strategy Planner. I want you to have your eyes wide open when you consider whether it is time to sell your business.
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 2021 Exit Strategy Planner. At the very least, it will provoke some thought, and this is a good time to think about your future.
Why make VBB Advisors a part of your team?
There are at least three very good reasons to talk to me about being a part of your team for this important chapter of your business journey.
Experience – I have done more significant deals than any other business broker in our industry.
Access to buyers – Throughout the pandemic, I have been in ongoing discussions with potential buyers, from both inside and outside the industry.
We are a sell side broker – We only represent the seller. Everything we do is on behalf of the seller.
Whatever your reasons are to sell your company - the timing, the current 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.
We specialize in sell-side advisory services and mergers & acquisitions. Our focus is on maximizing the realized value on behalf of our clients. VBB manages the entire process from valuing your business, assembling information, to qualifying prospective buyers, through due diligence, legal documents and closing. Our process is entirely confidential in order to protect the interests of our clients.
WHAT CLIENTS ARE SAYING
Mike Kelner was a Godsend to us, we have been thinking about selling our company for a few years but dreading the process, we procrastinated. We got Mike's number and called it. I cannot believe how fast, professional and kind he was. He found a buyer within a few weeks and we closed in a month. He was with us every step; he always returned calls and emails within minutes. I am so thankful for Mike, he was fantastic! Thank you Mike for everything! You are THE BEST!
— Greg and Connie Durheim, Fort Worth, TX
Business Valuations. VBB business valuations are based on financial analysis and actual market comparables producing extremely accurate estimates of value.
Financing Assistance. VBB will provide assistance to businesses in the acquisition of various types of financing. Services include preparation of loan packages and presentation to various funding sources.
Strategic Consulting. With over 30 years of experience in the industry, VBB brings to bear a wealth of knowledge in all aspects of the business.
Buy-Side Services. On a contract basis, VBB will assist qualified, well-financed buyers seeking acquisitions in the vending, office coffee and bottled water industries.
Preparing Your Business for Sale. VBB offers a two year strategic plan designed to prepare a business for a successful sale and maximize value on exit.