2021 M&A ACTIVITY IS HEATING UP QUICKLY
From all indications, several M&A deals will be made in the convenience services industry during the fourth quarter of 2021. As the industry’s leading sell side business broker, I have been fielding a steady flow of inquiries from operators. To each caller, I offer two pieces of advice.
There are some good reasons why so many operators are looking toward Q4 of 2021 as an excellent time to exit.
A Wilmington Trust study revealed a dramatic change in the mindset of business owners, with a rapid acceleration toward selling their business.
“Our data indicates that the number of owners who say they plan to retire sooner than expected has doubled since our last survey. Among owners of larger businesses, we note a 110% increase since last August; the number of owners of smaller businesses who plan to retire sooner has jumped 100%. In that same time frame, the number of owners of larger businesses who say the pandemic has spurred them to sell their business sooner than expected has increased 31%.”
Key reasons for selling:
Big concerns about the 2022 Biden tax plan
Unwillingness to reinvest
Increased revenues by Q4 will increase valuations
Nearing retirement age, so why wait?
Advice from VBB Advisors: Start Planning NOW
I fully agree with experts like Stuart A. Smith III, Wilmington Trust’s National Director of Business Value Strategies. “A speedy transition can negatively affect sale price and deal structure. A quick-and-dirty sales process is often exactly that. A savvy business owner doesn’t wake up one morning and decide to sell their business, because a sale isn’t a standalone event,” said Smith.
“The smartest owners engage in a regimented preparation plan that positions the company for maximum appeal to buyers, while also addressing all objectives and meeting a range of goals,” he added.
At VBB Advisors, we are urging our prospective clients to start the process now if they have a desire to sell by the end of 2021.
Understanding the VBB Process
When you work with VBB Advisors as your sell side representative, it is typically a six-month process from the initial information request to the closing of the sale. The quick and dirty sales process is available from other business brokers, but at VBB Advisors, we follow a very regimented plan.
Following a “kick off” meeting, VBB Advisors goes to work on creating a confidential information memorandum (CIM). For companies selling their business, a CIM, is a lengthy marketing document that provides potential buyers with a detailed first impression of your business before they would meet the selling company in person.
Next, a list of potential buyers is compiled and the CIM is completed and ready for distribution.
We are now about six weeks in and ready to go to market via emails and letters. Follow up calls relating to indications of interest take us to week 11. Management meetings and calls for LOI’s (letters of intent) take us into week 16.
In the final eight weeks of the process, the LOI is negotiated with the primary buyer, due diligence is performed by the buyer, purchase agreements are prepared, and the deal is ultimately closed.
Of course, this description is a simplification of a process that has many moving parts. With Mike Kelner and the resources of VBB Advisors on your team, you can count on a smooth and professional process and a result that will meet your financial objectives.
Second bit of advice from VBB Advisors: Be Visible
It is always easier to sell a known entity, so do not be anonymous when it comes to your company’s identity.
Showcase your company’s successes on social media, especially LinkedIn. Participate in industry webinars. Be involved with regional or state associations. Attend the NAMA Show in August of 2021 and make your presence known at discussion panels and on the convention floor.
Buyers are watching. They are always looking for the next great acquisition. Help them find your company and I will help you make the biggest deal of your life a huge success.
“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. 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.
I 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.