In the shadow of a huge NAMA show, M&A activity is hotter than ever
From all indications, these are special times in the convenience services industry. The 2024 NAMA show provided the evidence. There are more new operators – true newcomers – than we have seen in years. As new and enthusiastic operators enter the game, the exit door is active. At VBB Advisors, since October, we have seen one deal a month come to fruition. For the industry, it is a healthy balance.
An optimistic vibe
The increase in attendance at the show confirms what I have been hearing from operators – they are optimistic. People do not attend conventions when they are pessimistic. That is when they tighten the belt, because they consider the trip a potential waste of time and money. Remember the New Orleans NAMA show? Fortunately, that event is in the rear-view mirror. Today, operators are convinced that their businesses will continue to grow. In fact, some who had considered selling are now saying, “Why not stay in the game for another year to build the company and ultimately, the selling price?”
Ironically, this thought process has done little to slow the pace of M&A activity in the convenience services industry. There is after all a different line of thinking based on the recent past that says, “We were rolling along in 2019 and there was no end in sight to the prosperity ahead. Then 2020 happened.”
Baby boomers are driving the activity
Beyond that pessimistic thinking, largely buoyed by the upcoming election, high interest rates, tough to tame inflation, worldwide conflicts and an uncertain economy, the steady flow of M&A activity in our industry is driven by an incredibly high number of baby boomers who are ready to retire, along with the record high valuations that are happening right now.
Some of our recent deals include Konop in Wisconsin, Five Star Food Service in Houston, Legend Food Service in Washington, D.C., Maryland, and Virginia, plus Camelback Vending in Phoenix and Tomdra Vending in Tucson. In each case, the timing was right for a wide variety of reasons. These sellers relied on VBB Advisors to act as their sell side representative – leading to very positive outcomes.
Which Camp do you belong to?
Camp A – I’m ready to start the selling process!
Camp B – Let’s build the business up for a year or two and then put it on the market!
No matter what camp you are in, VBB Advisors is able to provide support.
For those in Camp A – (I’m ready to start the selling process!) – it is a good idea to start the process now, because ideally, a well-orchestrated sale does not happen overnight. Consider the recent sale of Camelback Vending. It was a one-year process that positioned the company perfectly, attracting interest from multiple buyers. It is a process we call “The VBB Exit Advantage.”
After the initial valuation was completed, we asked – “Where do we want that valuation to be when we market the company and how do we elevate the business to that level over the next 12 months?” We then establish key benchmarks to enhance the value of the company along the way. For example:
• We need to have the financials cleaned up by this date.
• We need to cut certain costs by this date.
• We need to raise prices at these locations by this date.
• We need to sell this many new accounts by this date.
The VBB Exit Advantage gives operators access to our team and our resources. That means quarterly calls to review the financials and periodic conference calls to discuss capital expenditures. We’re looking at every aspect of the business, positioning a company for sale. The VBB Exit Advantage implements steps that will make a business as desirable as possible during the marketing process.
If you belong to Camp B, (Let’s build the business up for a year or two and then put it on the market!) - you are perfectly positioned to get well ahead of the process. Work with VBB Advisors to begin thinking about business leases, where your sales are coming from (is it the right mix?) and the technological choices to make, the choices that will pay off, when you are two or three years away from the sale of your business. There is plenty to think about in that regard and VBB Advisors is happy to share some advice based on real-time M&A experience, combined with the most current market data.
Buyers come to me and my company, VBB Advisors, 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 our 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
