In the past few weeks, I've had calls from operators who wanted my opinion as to what effect the current virus scare would have on their ability to sell their operation and what would be the timeframe.
First of all, although I have studied a vast amount of research, market gazing, and a good hard look at some of my client's accounts and their possible negative exposure, I have to state that I don't know much more than what is out in the news and surveys every day. My personal opinion is that this will be a short-term disruption to business in the U.S., but, nevertheless, it WILL definitely affect operations in our industry.
Three weeks ago, I sent out a blast email to over 400 client/operators that I have had contact with over my 26 years in the industry. I specifically suggested that for those who have been sitting on the fence about selling, right now is a great opportunity. Why?
There is no doubt in my mind, that for the next few quarters (at least) there will be supply chain disruptions along with companies like call centers, for instance, that congregate numerous employees in close proximity, and can be seriously impacted. Already I'm hearing from some operators that they have been informed by specific accounts that they will be reducing production, holding back on new hires or even closing certain facilities for the time being.
We have seen other countries, like Italy, have closed schools for now. Many local school boards and universities in the U.S. have had that discussion. Other localities have cancelled large sporting and concert events and numerous employers are asking certain employees to work from home.
Some companies such as Facebook, Microsoft and Amazon have publicly announced cancellation of numerous events and conferences. Up to 30% of corporate events have been cancelled in Las Vegas. Although you may feel that much of these precautions are based on fear, not reality, more and more companies, local governments and travel and event planners are taking these pro-active measures.
Just today, I was in the busiest Whole Foods in south Florida. There were very few customers and the manager told me people are afraid of shopping in person and are ordering food online for delivery.
As I cautioned in my email blast, no one should make a life decision about the sale of their company based on the news we have heard just over the past few months. You have made a lifetime commitment to your business and should not panic or do anything irrational.
For those I know who had been considering selling pre coronavirus — whether because of retirement, health reasons or the difficult employee situation in our industry — this is most likely a realistic decision at this point to sell. As of now I have commitments from my major buyers that they are still going forward with acquisitions at this time. If, in fact, this virus does become more lethal in the U.S., their outlook could change. But for now, I’m still getting fantastic offers and quick closings.
What to keep in mind is this: If you have some large accounts (150 to thousands of employees), and these are clients in the travel, hotel, entertainment, major manufacturing or large employee/customer/student-based accounts like universities, call centers, fulfillment centers and the like, these accounts will be affected by supply chain disruptions and the shutting down of schools and events. You should expect your revenues to show a decent decline over the next 30 to 180 days. If your selling timeframe is within those parameters, you should consider moving now. Reduced revenues will, of course, directly affect the amount you will net after a sale.
On the other hand, if you are in no rush and your timeframe is longer than the next six months to a year, don’t panic. It might take you a while to gain back the current lost revenues, but eventually I feel this will pass and the revenues will come back.
The only caveat to the above is somewhat still unknown but very probable. The industries that can, are, currently investigating how many of their employees can work remotely, or are considering becoming more aggressive in replacing human employees with robotics and artificial intelligence.
This is not a question of if, but how soon.
Actually, both domestic and international companies have been exploring non-facility based personnel (work from home) and increased use of robotics and AI for a number of years. Something like this virus scare could be the catalyst for numerous industries to aggressively explore these new opportunities, which, of course, would greatly impact services industries such as ours.
MARC ROSSET is founder and president of Professional Vending Consultants Inc., a specialized intermediary for acquisitions of full-line vending, food service and office coffee service companies in the U.S. PVC has represented more than 315 transactions with gross sales value of just over $900 Million since 1993. Rosset has played a key role in helping to establish industry-recognized guidelines for the value of operations in our industry. He can be reached at [email protected] or (312) 654-8910.
