The end of 2019 is here, and with that milestone, many people start thinking about their resolutions for the new year. When the clock strikes midnight this Jan. 1st, we will usher in a whole new decade, and some of you may be thinking about a whole new life. With the carwash industry in the midst of a massive consolidation wave and major players actively hunting for acquisitions, now could be the ideal time to sell your business and embark on an exciting new chapter of life.
If you have been thinking about planning your exit, you definitely want to keep reading. This article is intended to help you better understand the process and critical steps that will enable you to turn your thoughts into actions.
An attractive flirtation or a realistic endeavor?
Before you even start on this adventure, you need to determine just how serious you are about selling your business. Think about your personal readiness and any areas of uncertainty. Are you (and your family/business partners) really prepared emotionally and in other ways to sell and start anew? It’s okay if you are just testing the waters to understand the market — but be honest with yourself and those you are talking to. Selling a business is a very serious undertaking that you need to be prepared for. That includes taking the time you need to make this sale work for you.
Step one: Organize your data
First, once you make the decision to seriously pursue a sale, gather your facts and get your financial documents in order.
Before you can initiate conversations with a potential buyer, you need to organize all the operational and financial data that will help potential buyers understand your business. Have this information on hand:
- A brief profile of your site(s), including opening date, carwash model (express, flex, full-serve, etc.), lot size, tunnel length, equipment type, point-of-sale (POS) type and number of pay stations, wash menu and monthly pass program pricing, and — if appropriate — vacuum type (central or canister)
- The last two full years’ profit and loss statements and related POS information for each site, as well as the same information for the latest 12-month period
- Annual balance sheet information
- Details of any recent renovations or upgrades to the equipment or the site(s)
- Whether your property is owned or leased; if leased, provide the relevant details on term and rent amount.
Step two: Take a critical look
As they say, you never get a second chance at a first impression. Be sure to look at your business as a potential suitor would. Consider its appearance, housekeeping and upkeep, because a serious potential buyer will do the same.
Be objective. When you are thinking of preparing your carwash site for sale, the first order of business is to make it as appealing as possible to potential buyers.
Be realistic, too. If a newer, shinier carwash is just a short drive away, your suitor(s) will know about it. They will want to understand how you compete as they consider the amount or structure of a potential offer.
Serious buyers often visit a site as a regular client and check out every aspect of the site and the customer “offer” or experience. Besides the interior of the carwash being in tip-top shape, make sure the exterior is in excellent condition too. Prune your landscaping, put a fresh coat of paint on the exterior, and be sure all maintenance is up-to-date. If your location offers unique technologies and state-of-the-art carwash services, make sure you do your best to highlight these features.
Whether you started the carwash business 20 years ago or it was passed down through the family, you saw potential in it, and now it is your turn to highlight the same potential to your buyers.
Step three: Acknowledge your employees
Your employees are an invaluable asset and have contributed to the success of your business. Any serious buyer will want to view your team as a key part of what drives customer satisfaction and loyalty. You may have a number of employees who have been with you for many years and are part of your extended family. Depending on your situation, you may want to ask the following questions to the potential buyer:
- How will my employees be treated in a sale?
- Will they be offered employment in the new business?
- Will the new business offer any benefits not currently provided?
- Will the new business offer any potential new career opportunities?
Step four: Consider your partner wisely
Your business is your baby. You raised and nurtured it, and now it’s time to take the next step in growing it. You want to think about what happens after a sale closes. That means picking the right relationship partner.
Seek a buyer who will not only make the transaction process as easy and transparent as possible but who will also honor the business you worked so hard to build and the customers you have attracted as the local carwash. If you pick an acquirer who displays the same care and attention to detail you used to start, operate and build your enterprise, you will likely be in good hands. Some specifics to consider:
- Do they seem fair, honest as well as reputable?
- Are they flexible? Will they build the deal that is right for you?
- Will they be good stewards of your customers, employees and community relationships?
Beyond your own gut check on these factors, it’s always a good idea to get references from other carwash owners and professional carwash industry experts who have sold to and/or done business with the buyers you’re considering. Regional carwash associations and networking groups are also good resources. Find out if the potential buyers are honest, flexible and reliable. Determine if they will pay homage to and build upon the business you have built and the communities you serve.
Step five: Be smart about your expectations
At the core for sellers, valuation and economics are obviously top of mind, but many other considerations, as discussed earlier, also come into play. You need to have a good team in place — including your lawyer, CPA and other trusted advisors — who can support and help guide you through the process.
No two acquisitions are exactly alike, but they all have one thing in common: They do not happen overnight. Reaching a deal with a buyer may take anywhere from several days to several weeks to several months.
Once a deal has been struck and you enter into a letter of intent, you should expect a period of 60 to 90 days for the buyer’s due diligence to take place and the legal work to be completed. Then you close, and an exciting new chapter of your life can begin.
Jeff Maize and Peter Sloan lead the acquisition activity for the International Car Wash Group (ICWG), which owns and operates over 150 sites in the U.S. under the Car Wash USA Express, Supersonic Car Wash and Goo Goo Express brands. Globally, ICWG operates over 900 locations in 14 countries across the U.S., Europe and Australia. You can contact Peter or Jeff at [email protected].