The population of buyers for small California businesses has grown dramatically over recent months, with corporate layoffs releasing thousands of business-savvy people into the market for companies they can buy and manage. A well-run organization with a history of profitability, in a business that doesn't require advanced university degrees to understand and operate, is exactly what these buyers want.
This is a good trend from the standpoint of owners of full-line vending route companies who are ready to sell.
The mistake often made by sellers in this business is to think that because theirs is a popular category among prospective buyers, they need only announce the company is for sale and watch the offers come in. By not preparing a vending business to look its best--in terms of its assets and its financial performance--a seller may not realize the best available price and terms.
And no "extreme makeover" is called for. It is a good idea, however, to take care of some of those adjustments that have been put off--changes that will improve profitability and ease of operation. That includes the slightly stressful work of analyzing the route patterns and delivery schedules to see if driver time--and hence payroll cost--could be used more efficiently.
One vendor was able to combine route "portions" into a program that required two-and-a-half routes rather than four. He'd put it off, not wanting to lay off a driver who'd been with him a long time, but the resulting changes substantially reduced his costs, boosting profitability and resulting in a significant increase in the prices proposed for his business, compared to what was offered prior to the change.
Another important move is to eliminate locations that yield marginal profitability, so equipment can be placed in more productive locations and route drivers can avoid the "break even" or loser stops. Naturally it's critical to continue to serve underperforming locations if they are satellite facilities of large clients that provide more profitable vending stops.
A look at the inventory being sold is next. It's surprising how many vendors carry items way past their expiration dates. Perhaps the customers don't notice, and don't care. But prospective business buyers are on the lookout for little hints that the prospective purchase candidate is not worth the asking price. It's foolish to lose a deal or a substantial amount of money that might have been offered over small issues such as out-of-date merchandise.
Most business brokers know how to prepare a "route report" for review by qualified buyers. Sellers who don't have the benefit of that service should know it's an easy document to put together, and should list clients by number, instead of name, with their vend locations designated with alphanumeric code, i.e.: Location A, Location B, and so forth. Then the type of machines is listed, along with the month-to-month collections from each.
Also organized should be the protocol for revealing information to prospective buyers. The route report, even in its coded format, should be seen only by buyers who have been qualified, and have signed a non-disclosure form. The request to "ride the route" should be granted only to a buyer with whom the seller is in contract, with a contingency being the buyer's right to cancel the sale if not satisfied with due diligent inspection of business records and/or a visit to some of the locations. Seller's condition should be satisfactory review of buyer's financial capability.
The standard rule of thumb, that a vending company is worth 50% of annual gross revenue plus wholesale value of equipment and inventory, continues to be followed, with the understanding that a company using the latest "hardware," such as owned machines able to take debit or "value" cards as well as cash, may yield up to a 10% premium. A lower value might be the "right price" if the buyer will need to institute changes needed to improve the company's profitability.
It may take a month or two to get a full-line vending company ready for sale, but getting a top-tier price makes the effort worthwhile.
See all vending routes for sale on BizBen.com
About The Author - Peter Siegel, MBA is the founder and President of www.BizBen.com - and the BizBen Network of California business owner/sellers, business buyers, business brokers and business advisors. A nationally recognized author (3 books and a syndicated small business blog) and expert consultant. If you are selling a business and need professional assistance utilizing high performance advertising, marketing, and highly effective strategies, or individual customization with your BizBen Power Search options in buying a California business, you can reach him at 925-785-3118.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Timothy Cunha JD, Business Broker: SF Bay Area
SF Bay Area experienced attorney, & business broker. I & my EvergreenGold team offer owners sound advice & expertise to build business value & achieve profitable sales. For a FREE business evaluation & SWOT analysis for your business call me direct at 650-600-3751, 650-866-5393 Text.
|Janet Carrera: Escrow & Bulk Sale Service - SF Bay Area
Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.
|Christina Lazuric CBI CBB, Business Broker: Orange County
Premier Brokerage for selling Orange County Service based businesses since 2005! CBB provides a step by step approach to Business Brokerage, M&A Services, Business Consulting & Valuations. Contact me about selling or buying service based businesses: 949-257-7823 Cell.
|Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA
California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.
|Elizabeth McGovern: Escrow Services - San Francisco Bay Area
McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.
|Rick Carlson, Business Broker - Southern California
You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.
|Chris Seaman, Business Broker: Southern California
Founded in 1994, First Choice Business Brokers has accelerated to become one of the most successful Business Sales Organizations in the world. Our team of agents have gone through extensive training to become experts in the field of business brokerage. Call Chris at 858-578-4111 for more info.
|Mani Singh CBB, M&AMI, Business Broker, Southern California
I have successfully represented clients sell & acquire multitude of businesses ranging from Gas Stations, Liquor Stores, Markets, Super Markets, Smoke Shops, Postal Stores, Restaurants, General Retail, Auto and Construction Related. Phone me for assistance with selling or buying at 951-296-7646 Cell
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