There is a great deal of churn in the vending industry. Operators routinely sell routes — or their entire vending business — to buyers. Whether the seller is downsizing or looking to retire, or whether buyers are expanding into new areas, both share a common goal – a fair deal. Sellers want top dollar for the routes they have worked so hard to establish, and buyers want to know the true value of the businesses they are looking to purchase.
At the center point between each party’s best interests lays the key to making both sides satisfied: objective data. This hard data can provide a fair and equitable price for the business. Historically, quantifying these figures has been a problem in vending, which is commonly a cash-centric business. Calculating and defending an appropriate sale price is often an issue whenever there is little hard data to go on.
According to Michael Kelner, managing partner of Vending Biz Broker, a consulting firm that facilitates the sale of vending operations, the lack of objective data has plagued vending business sales for years. “Sellers that cannot provide reliable information on cash sales and inventory turns have a far inferior negotiating stance. Buyers are not spending top dollar for business operations that cannot be quantified, and the end result we usually see is a sale price that is significantly lower than what a fair market value would dictate.”
Kelner says that, in contrast, operators who use vending management systems (VMS) can definitively quantify value and thereby negotiate more favorable deals. A VMS, like the one offered by Parlevel, provides hard data across almost every aspect of a vending operation. Armed with these concrete statistics, sellers can get a fair price for their operation, and buyers will know exactly what type of operation they’re acquiring. In fact, companies that have deployed a VMS have been known to successfully drive their selling price up by as much as 20%.
Buying or Selling — Vending Technology Makes Good Vending Business Sense
Not only does vending technology provide negotiating leverage by keeping track of concrete data, but it offers tools and insights that will grow a vending business altogether. A VMS delivers a wealth of knowledge and unparalleled control over an operation. Parlevel’s VMS offers unique features like machine break-down alerts, product recommendations, and route suggestions that can help operators increase the efficiency and profitability –and thus the value – of their vending business. If it comes time to sell, concrete data and a higher company value will keep the company from being undervalued, and ensure it sells at a fair and competitive price.
The Price Is Right
Perhaps an operator has spent decades creating and expanding their vending business. Maybe it’s been in the family for a number of generations. It could be that an operator just doesn’t have the time to run it like they used to. Regardless of the situation, sellers want to feel like they get a fair price for the business they’ve invested so much time and money in. To achieve this, operators need to know two things: What is my vending business realistically worth? And how can I persuasively present this figure to a potential buyer? Guessing your operations value off of spreadsheets done by hand will not yield an accurate number. Furthermore, old spreadsheets will do nothing to persuade a potential buyer. Smart buyers will poke, prod, and challenge any data presented that cannot be objectively proven. The best way to get an accurate valuation from your business that cannot be challenged by a potential buyer is through the concrete numbers provided by a VMS.
A vending management system will have, at its core, a database that is fed information directly from the vending machines themselves via two-way telemetric data exchange — or DEX. All the data is date-, time- and location-stamped, which mitigates any tampering. This raw information can then be parsed in any number of ways, creating enlightening reports that give a 360° evaluation — and valuation — of your business. From how often the machines are refilled to how long they are down for service, from how much money a machine makes to its best-selling products, a VMS reflects the objective reality of a business. In contrast, most other vending business valuation techniques are subjective and open to interpretation.
This technology gives the seller solid negotiating leverage when potential buyers attempt to undermine an asking price. Furthermore, a route that has been upgraded to DEX and is already running VMS technology makes for a much more appealing purchase to the buyer, since it saves them the cost of having to upgrade and integrate later. Again, according to Kelner, VMS deployments can successfully drive selling price up by as much as 20%. “Through technology-driven business improvements such as optimized route schedules, reductions in drivers, and improved sales by offering merchandise customers truly want,” says Kelner, “gross sales go up, expenses go down, and profit margins widen. These bottom line changes add value to the business and increase sale price.”
Top Data Yields Top Dollar
As Kelner asserts: “Buyers are willing to pay more for a vending business that is current and well run.” The visibility and insights vending operators will gain from VMS will help them operate more productively and profitability today. And, when the time comes to sell that vending business tomorrow, they’ll be able to negotiate with confidence – armed with a rock-solid valuation that will land them a fair and sweet deal.
Headquartered out of historic San Antonio, Texas; Parlevel Systems is the fastest growing provider of Vending Management Solutions (VMS) for vending operators and coffee, tea, and water service providers. Founded by a team of successful vending and technology professionals, Parlevel is dedicated to delivering powerful yet easy to use technology that provides operators with complete control and accountability of their business anywhere, anytime. In addition, Parlevel has a dedicated team of customer and technical support to ensure seamless implementation and a transformative return on investment. For additional information, please visit: www.parlevelsystems.com.