Capitalization policies need to
be reviewed and revised. Business
owners naturally want to expense
everything possible in order to min-
imize current year taxes. However,
this practice increases expenses and
decreases net income. The goal is to
portray the business in the best pos-
sible light. Overstating expenses obvi-
ously hurts this cause.
I recommend a two- to three-year
steady state period for businesses.
During this period, the business
refrains from expanding geographi-
cally, acquiring small competitors or
bringing on new lines of business.
This demonstrates to a prospective
buyer that the business is on solid
footing, grows organically, provides
consistent recurring revenue and is
improving margins while controlling
costs. These are all major concerns of
a buyer so anything that can be done
to put them to rest will increase the
value of your business in their eyes.
Vending operators have histori-
cally discounted the value of con-
tracts. In their minds, contracts are
not enforceable, too legalistic and
an impediment to a sale. Buyers, on
the other hand, have a dramatically
different view. Contracts are seen
as evidence that the business is run
in a professional manner and that
the client is likely to still be around
once the owner leaves. Therefore
it is important to bring as many of
your clients under contract as pos-
sible prior to a sale.
The final step of this phase is to
have the business once again profes-
sionally valued. A valuation at this
point is an excellent indicator if in
fact you will be able to achieve your
target price. Further, it provides
tangible evidence that your efforts
over the preceding years have been
beneficial.
The final year
It is important to assemble your team
of advisers at this point. This will
include tax advisers, financial plan-
ners, accountants and attorneys.
Interview several attorneys with
an eye to experience in mergers and
acquisitions along with strong negoti-
NAMA Booth 1009
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®
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from roast and ground fraction packs and whole bean to
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Experience Café Bustelo at booth #1009.
NAMA BOOTH 605
PepsiCo Foodservice
is a premier global
Foodservice partner
that leverages the best
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innovation and solutions,
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Please visit us at the
2017 NAMA One Show
at booth #605.
PEPSICO FOODSERVICE
TO BUYERS
contracts are
seen as
evidence a
business is run
professionally.
28 Automatic Merchandiser VendingMarketWatch.com February/March 2017
B U S I N E S S B A S I C S