All business owners have that day, the one where they envision life after their company. Maybe they plan to retire. Maybe they developed a passion for a new business. In either case, it’s important to have a plan for the future. In the case of opting to sell a vending operation, don’t discount investing in some of the latest technology. Why? Because some innovations can greatly increase the price you will get for your business.
Selling doesn’t mean you stop working
Deciding to divest your operation doesn’t mean you should pull back the reins on investing. According to Vending Biz Broker owner Mike Kelner, operators wanting to sell their business should run it like they will be in it for the next 10 years. While this may seem counter intuitive, updating equipment and practices can provide a stronger, higher value business. Kelner believes that adding technologies that validate sales numbers results in a 10 to 15 percent value add.
Alan Munson, former vending operator and co-owner of Parlevel Systems explained that it’s the transparency of data that is the real benefit. When sales numbers are kept in an excel document, there is always the worry the data is falsified. With a VMS, any VMS, the cash accountability is much better.
I spoke with an operator looking to acquire routes and while he wanted to remain anonymous, he agreed. He would trust, and likely pay more for, a company that could prove its numbers via technology.
Where and how much investment
While Kelner doesn’t recommend any one system over another, he does believe it can add value. He has seen companies that have anywhere from 100 percent of sales data recorded electronically through remote machine monitoring to those with DEX reading via handhelds on 20 percent of their machines. The buyer really has to decide how that investment influences the offer, according to Kelner. There is a stronger need for technology in large metropolitan areas, especially where there is pressure to keep labor costs low. Also, it’s more important when the operation is likely to be bought by an organization outside the vending industry because electronic sales data and updated equipment give the buyer much more confidence in what they are buying.
Regardless of the level of technology, it’s the validation of the sales numbers that is the key. Having DEX, RMM or a VMS can reduce holdback, which Kelner says is always a point of contention for a seller. The holdback is a percentage of the sale price withheld for a specified length of time in which the buyer validates the numbers which were presented. The more the numbers can be validated through secure, respected systems, a smaller percentage is held back and for a shorter amount of time, explains Kelner.
In the end, operators who have implemented technology can rest assured it will not hurt their chances of selling, but actually increase those chances as well as likely fetch a higher purchase price. It shows the business is run efficiently with accurate information and leads to a better presentation. Operators without technology should consider its benefits, even if they selling is in their future plans.