Looking back at last year, I realize that one business sale was so well executed, it is worth writing about. Every aspect of the deal was picture perfect. The operator’s attitude, the planning, the adjustments that were made to maximize the selling price – all spot on. Best of all, it is a roadmap that can be used by any operator who is interested in selling their business in the coming months.
The beneficiary
What operator was the beneficiary of a perfect deal? Jodi and Mike Glimpse of Camelback Vending in Pheonix. They had a clear plan to retire in Hawaii, a plan that took shape during their 18 years as a full-service operator. Planning was the key here and that well planned approach is something that every operator should keep in mind.
The Camelback deal was perfect. Everything lined up for Jodi and Mike. They were operating in a growth market that all the major players were interested in. Their own business was growing rapidly, and they had all the right technology in place. With that tailwind, they sold their business for the highest price to sales ratio I have ever seen.
Sophisticated valuation
We started preparing for the sale one year before the company was sold. It all starts with a sophisticated business valuation, looking at top line sales and profitability. At VBB Advisors, we use the same advanced approach that public companies use when evaluating the purchase of a business.
Fine tuning
Next step – counseling designed to fine tune their business and maximize value. I worked with them throughout the course of the year on getting their financial statements ready, reviewing all their financial statements with them on a quarterly basis, advising them on which capital expenditures to make or not make. We talked about what customers are worth bringing on and which ones might be detrimental. At the very least, we had extensive quarterly calls to review all of these key factors throughout the course of the year so that when we got to January of 2023, we had all our ducks in a row.
Multiple offers
We were completely buttoned up and so when we went to the market, we had a great package. Of course, you just don't slap the information out there in the market. We did a full-blown information memorandum - very detailed, pictures, graphs, comps and more. When it went out to buyers, they were immediately impressed. We started off on a positive note and not surprisingly, the momentum grew, and Camelback found themselves being courted by multiple suitors. Aramark, Canteen, Sodexo and a large entity from Southern California were interested in the Camelback deal. It was a perfect scenario for the buyer.
Jodi said she appreciated the convenience of VBB’s online system for gathering information. “It was great,” she said. “Mike would say, ‘I need this list of documents,’ and then I would go in and upload it, giving him access. Once Mike started getting interested parties and they signed their nondisclosure, he would give them access to some documents and we could see who was going in and looking at them, which was nice,” Jodi added.
Selling the opportunity
You may be surprised to learn that Camelback was not the most profitable operation I have ever seen. They were a very dynamic sales organization, led by Jodi, who was a force. Like a lot of fast-growing companies, profitability lags, because growth is expensive. However, because they were in a high growth market with enormous potential, buyers were willing to look forward and look somewhat beyond the financial statements – leading to the very high price to sales ratio.
Jodi said she was happy to have a broker who was representing her exclusively. “The fact that Mike is a seller’s broker was very important,” she noted. “I never wanted to feel like I had someone playing on both sides. It's like trying to buy a house using the realtor who is selling the house. You don't ever know if you're getting the most honest feedback or advice. With Mike, I always knew he was looking out for our best interests.”
Two valuable lessons
One lesson to be learned as we sit here in Q1 2024 is that you will be rewarded for planning when you are selling your business. If you want to sell your business in January 2025, now is the time to start the process. One of the great benefits of starting the selling process well in advance is that the entire experience will be calmer and easier. When the seller knows everything is completely in order and their company is perfectly positioned to generate multiple offers, that mitigates a great deal of stress. The other lesson to be learned – deal only with a “sell side” broker, who represents your interests exclusively.
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 2024 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
