SERIOUS BUYERS SEEK OCS, VENDING & MICRO MARKET BUSINESS
Amazingly, despite the challenges of 2020, I have been approached by a serious buyer who is motivated enough to buy based on 2019 valuations.
The willingness to buy based on 2019 valuations tells us three things:
Even with the challenges of the past few months, buyers from outside the industry are so attracted to the convenience services business, especially unattended retail, they are willing to make offers based on the only revenue model that could possibly attract operators.
This serious buyer and others like them are confident about the future of the economy and the future of convenience services. More good news.
Money is cheap, it is sitting on the sidelines and serious buyers want to put it to work.
The ravenous appetite to enter the convenience services business, the confidence that buyers have and the low cost of money – this is all very good news for operators who are attracted to the idea of spending more time on the golf course and less time dealing with conditions that are beyond their control.
Why I suggested this idea to serious buyers
Since mid-March, I heard from so many frustrated operators. One large operator summed up the stress and exasperation he was feeling. “I didn’t work this hard for this many years to be out running a route, but there is no other choice.”
With the immediate road ahead looking challenging, some operators, for the sake of their physical and mental health, simply want to find a way to sell their business now. As the leading sell side intermediary in the convenience services industry, I knew I needed to come up with a way for operators to sell quickly, but still enjoy the potential maximum selling price.
When I suggested this 2019 valuation idea to my serious buyers, they loved it!
The structure of the deal
The deal would be structured based on several factors.
The seller’s business mix needs to be the right fit for the buyer
The pandemic’s impact on sales
2021 and 2022 revenue
These factors will determine the selling price and the amount paid at closing. The performance of the business during 2021 and 2022 provides the buyer and the seller with mutual protection. The structure of this deal ensures maximum upside for the seller if sales returns to 2019 levels or beyond and some protection for the buyer if sales never reach those 2019 levels.
It is a classic earnout model with a unique twist as it is based on past and future performance, ignoring the present conditions.
Protecting the seller
There are several strategies that we will utilize to protect the seller:
Maximize the down payment based on the 2019 valuation and selling price.
Set a downside floor for the earnout just in case sales don’t come back to 2019 levels. We will minimize the downside.
Require the buyer to retain key employees through the earnout period.
Allow for involvement by the seller to retain key accounts, add new business and keep a close eye on operations, to the extent that the seller wants that type of involvement.
Is this the perfect deal? Is this the deal you dreamed of? Maybe not, but in a climate of unprecedented turmoil for operators, it should be very encouraging to operators that there are serious buyers who desperately want to be in the convenience services business.
Contact me so we can discuss whether this type of deal, based on past and future performance, ignoring the challenges of the present, is right for you and your company.
Certified Business Intermediary
Mike Kelner specializes in sell side advisory services and mergers & acquisitions. His focus is on maximizing the realized value on behalf of clients. VBB manages the entire process from positioning your company through the Value Builders System, to valuing your business, assembling information, to qualifying prospective buyers, through due diligence, legal documents and closing. The process is entirely confidential in order to protect the interests of clients.
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.