Rosset report: M&A activity was a core theme of 2021; the new year’s outlook is strong

Jan. 3, 2022

My last M&A update in the first quarter of 2021 spoke of a rebounding economy, rising stock market, steady interest rates and the start of COVID-19 vaccinations (at that point for just a targeted population) amid a convenience services industry that itself was slowly starting to recover from the worst of the pandemic.

As we close a turbulent year and begin 2022 – the third year impacted by the coronavirus crisis – the industry is experiencing several new headwinds, including supply chain issues caused by a backlog of manufacturing and deliveries, along with soaring omicron variant infections. Many operators tell me of bottler delays or not being able to get all the flavors they ask for. Same with Vistar and other dry goods suppliers.

Finding employees

While this has been an ongoing problem in our industry for years, finding and keeping new hires during the pandemic has been nearly impossible. Operators are competing with such commercial companies as Amazon, Wal-Mart, UPS and FedEx, among other national behemoths, which are offering above average pay and signing bonuses. Very few of you are able match those increases.

Price increases

Most operators with whom I spoke to recently tell me they are receiving increases of between 10% and 20%, which is always difficult to deal with.

What’s equally as vexing to operators is the publicly announced delays in returning employees to the office from Lyft, Ford, Google, Microsoft, Uber and dozens of other U.S. corporates, as well as many national banks, insurance companies and call centers.

As for the Biden administration’s vaccine mandate for U.S. workers, although now in the hands of the Supreme Court, if passed, could bring about the layoff of numerous employees.

While no one expects these issues to remain long term, (except maybe the employment situation), no government or economist can accurately predict when things will turn around.

2021 M&A activity

It has been suggested by some of my peers that 2021 activity was just starting to come back and 2022 will see a very large increase over 2021.

By contrast, 2021 was my third-best year for brokering vending business sales. Ten deals were valued at more than $40 million in revenues each. These 10 listings have either sold or are about to close.

Of course, there were numerous closed deals executed by other brokers, so overall 2021 was one of the best years for completed acquisitions. From my viewpoint, 2021 was not just starting to come back, it came back with a vengeance!

2022 activity estimations

When looking at the year ahead, I need to explain the dynamics and demographics of future mergers and acquisitions activity. Although we have seen a handful new companies starting operations within the past few years, the industry as a whole is losing professional operations at a torrid pace.

While some of these losses are due to COVID, most are related to the difficulties and headwinds I mentioned above. And typical situations like retirement or health concerns are still attrition factors.

Regardless of an individual’s situation, dozens of top independent vending companies have left the industry without being replaced by new independent operations.

I define an independent as a one- to four-warehouse company that operates in a single-state or a distinct two-state service area – not to be confused with the likes of Canteen or its franchises, AVI Foodsystems, First Class Vending, American Food and Vending, CRH Catering Co., RUSA/Elite or a handful of other national and regional operators.

The largest purchasers are competing with each other to buy the rest of the professional industry. These are cash buyers who have been paying the highest prices I’ve ever seen. *

Why? In many areas, even some states, there may be only one or a handful of well-run operations left. Once they are gone, they won’t be replaced, so these giants see the writing on the wall and need to find and acquire these companies ASAP before a competitor does.

For instance, in 2021 I’ve listed and sold three of the top-remaining operators in southeast Florida. In my best estimate, this leaves just a few decent operators left in one of the fastest-growing areas of the country. Or Chicago, which had about 70 top operations when I started my company, Professional Vending Consultants, in 1993, now has only seven good ones left. Just to state a few examples.

So, I predict 2022 will still see a flurry of concentrated activity, but 2023 and beyond could be meager. I’m not suggesting that all M&A activity will disappear after 2022, but we could see declining numbers year over year after 2022.

* The highest offers are consistent with companies that encompass telemetry, operate micro markets, have a large majority of cashless machines, have contracts with their largest accounts and do not overequip or overservice their clients. Sellers who are operating in the past – without telemetry and cashless systems – are still sellable, but at prices that may be 15% to 35% less than the highest offers.

The economy

No one can predict with certainty what the economy will be like in 2022. Right now, the general economy is robust, even considering all the headwinds, compared with 2020. We all hope this will continue, but with the current increased cost of goods, the labor situation (which should improve but we can’t predict how many will be coming back to the office), raising inflation, increasing interest rates and uncontrollable government debt, many economists feel we are in a boom or bust scenario. No one wants to base their future plans on a coin flip, but that’s where we are right now.

Case in point: November’s unemployment claims were the lowest since 1969, a very positive development. On the negative side, however, we had the highest one-month inflation increase since 1982 and now are seeing the highest positive COVID cases in certain areas of the U.S. since the start of the pandemic. It’s difficult to express the true path forward with these conflicting numbers.

We are all aware that since the start of COVID, our industry would be facing a new normal regardless of when the virus dissipates. For those who can rapidly adjust to these changes, you should be able to hold your own.

Have a healthy and prosperous new year.


Marc Rosset is founder and president of Professional Vending Consultants Inc., a specialized intermediary for acquisitions of full-line vending, foodservice and office coffee companies in the U.S. Since 1993, PVC has managed more than 320 transactions with aggregated gross sales of about $920 million. Rosset has played a key role in helping to frame industry-recognized guidelines for determining the value of an operation. He can be reached at [email protected] or (312) 654-8910 (voice) or text at (847) 814-3939.


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