There is an old saying, “The ship turns slowly,” that does not seem to be relevant anymore. Business conditions, political winds and societal attitudes change quickly in today’s world. These changes contribute to my belief that 2021 is a good time for a convenience services operator to sell their business.
“I’m ready to retire - I’m worried about my health.” These are some good and commonly heard reasons to sell your business. In today’s business environment, there are four very compelling reasons to sell your business now – reasons that cannot be ignored and need to be seriously considered by operators.
Reason #1 – Political Winds – Taxes are pointing upward (2022)
The new administration would like you to believe that only the super-rich will be paying for the trillions of dollars in recovery programs and stimulus checks. Higher taxes will certainly be aimed at the business community.
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Dan Wiener, who runs the Independent Adviser for Vanguard Investors and is chairman of Adviser Investment Management, told CNBC, “We know that tax rates are likely going up. The question is, will it be 2021 or 2022? I don’t think individual tax rates are the bigger concern, I think corporate tax rates and capital gains are going to be the main focus.” Wiener believes that major tax changes are unlikely in 2021. “It’s very unlikely they will try to force a big corporate tax hike this year.”
With tax increases looking certain in 2022, this is the right time to sell your business.
Reason #2 – Business Trend - Big players are hungry for acquisitions
I am hearing from the industry’s most active buyers and they see one easy way to recoup sales that in many cases, are lost forever. Their answer for quick growth is by making acquisitions. Buyers are out there and they are motivated to acquire fundamentally sound companies. Does that describe your company? Fundamentally sound? If so – now is the time to explore the sale of your business.
As you are probably aware, it is much easier to put together an asset sale than a stock deal, for several reasons. To illustrate how motivated some big players are to make a deal right now, one prospective buyer made it clear that they were willing to execute a stock deal if necessary – anything to move the process along and get the deal done in 2021.
Reason #3 – Market Condition - Act before the “tsunami of sellers”
As I wrote several months ago, “Economists are saying that the sale of privately held businesses by baby boomers could be the largest transfer of wealth in human history. Millions of businesses across all industries will come up for sale in the next 10 years. Convenience services is no exception.”
Many deals were delayed by the events of 2020, which will only intensify the inevitable rush to the door.
Several operators are waiting for the mass repopulation of offices (should be around September 1) and hopefully, a significant jump in sales, back to some sense of “normalcy.” Once that happens, we will see a flood of sellers and a definite “buyer’s market.”
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Get ahead of the pack and make a move while the inventory of available companies is still relatively low. Since we are typically negotiating the valuations based on future (post recovery) sales, there is nothing but upside for an operator who chooses to act now, rather than wait around with the hesitant majority of sellers.
Reason #4 – Positive Image- Suddenly, we are a technology play
There is whole new category of buyers that is attracted to the convenience services industry because of the exciting technology associated with touch free equipment, smartphone apps, unattended retail and a new breed of high-end refreshment options. They are younger, tech savvy, well capitalized and attracted to recurring revenue opportunities.
The recent press around our industry is only reinforcing the positive image of the convenience services industry.
Consider this:
- Marriott is replacing the breakfast buffet in some properties with an impressive bank of vending machines.
- Amazon is taking unattended retail to new levels with their Amazon Go stores.
- We have seen a myriad of new products being sold through vending machines in the past year, from PPE to CBD products.
All these developments point to a very favorable profile for the convenience services space. Bringing the product directly to the consumer is even better than delivery. Private equity groups are beginning to recognize the opportunity and with plenty of cash on the sidelines, the convenience services industry is an ideal acquisition target.
Our Philosophy
“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.
I am Mike Kelner, the leading sell side intermediary in the convenience services industry. Contact me for a confidential conversation and to explore the possibilities.
