What we learned from a busy 2024 in the M&A world of convenience services
One thing is clear. Nothing can stop the flow of deals in the sought-after convenience services space. Not war. Not international strife. Not polarizing elections. Not inflation. Not high interest rates. There are good reasons why the industry remains so hot, but before we cross over to 2025, let’s look back at some of the best lessons, comments and insights from 2024. We have many to choose from.
In 2024, we talked about the “perfect deal.”
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.
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.
One lesson to be learned is that you will be rewarded for planning when you are selling your business. If you want to sell your business in January 2026, 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.
As every convenience services operator knows, making a move to enhance their technology, from vending management systems to cashless payment platforms, is a costly, time consuming and disruptive endeavor. Such a move will also pay for itself many times over when an operator sells their company.
During my career, I have served as a sell side intermediary in over 150 vending, micro market, coffee service and foodservice transactions. I have seen firsthand the impact of technology on the process, the terms and the selling price of a business.
Another key topic in 2024, the importance of confidentiality.
For convenience services operators, here is the bottom line regarding the importance of confidentiality when selling your business: It protects the value you've built into your business as it relates to customers, suppliers and employees. A loss of confidentiality can upset all three of those critical value components. I have seen it happen – it is not pretty, but it is completely avoidable.
Our process of marketing your company for sale makes a confidentiality agreement essential. First, VBB Advisors distributes what is called a blind teaser, a one-page document with very high-level information. It doesn't disclose specific geography. It doesn't disclose any company name, just general information. It might look like this:
“Refreshment services business, Southeast US, here are the annual sales, here is the EBITDA data, here are some key general features. If interested, contact us.”
As interested parties come back before we disclose any information, they sign a non-disclosure agreement (NDA). Once that is in place, then we can share more detailed information with the prospective buyer.
We looked at the recurring revenue streams that buyers love to see.
1. Point of Use Water Rentals
2. Ice Machine Rentals
3. Brewer Rentals
4. Fuel and Delivery Charges
Why is recurring revenue so important? Because it is one of the defining characteristics of a premium company. While many operators have excellent companies and I have proudly acted as their sell side intermediary with outstanding results, recurring revenue in the hundreds of thousands of dollars moves a company into the premium category – one that generates numerous offers at higher multiples from buyers.
We also examined “premium acquisitions” in another article that I wrote for Vending Today.
As a business broker for over three decades, I can say one thing with complete certainty. Every operator believes that their company is a premium acquisition. After years of hard work and careful attention to profitability, a high degree of pride and confidence by an operator is admirable and expected. Here is the reality: There are certain criteria that must be met for a company to be in the elite M&A category, some of which are out of an operator’s control.
Defining characteristics that are beyond your control.
1. The location of your business
2. The general economic disposition
An important insight - Defining characteristics that you can control:
1. Contracts
2. Recurring income
3. Management business
4. Gross Profit
5. Choosing technology
6. Pricing
7. Leases
8. Visibility
What are the big takeaways from 2024 that every operator should be thinking about?
If an exit strategy is on the horizon for your company – in six months or five years:
Start planning now – make the right choices. Control those defining characteristics of a premium acquisition that you can control.
Turn to VBB Advisors to help you position your company for a future sale that will reward you and your family for your hard work and dedication
Choose a sell side broker – VBB Advisors is on your side throughout the process. It makes a big difference when it comes to the selling price and the conditions you seek.
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 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
From all of us at VBB Advisors – Happy Holidays and we wish you a safe, healthy and prosperous 2025!
