No matter the circumstances — a desire to retire, no viable successor or just getting out while the getting is good — independent business owners need to have a well-reasoned exit strategy in their hip pocket at all times.
As one dealer told us a few years back: "You have to know your number. You never know when the next person through the door might be there to offer to buy your business."
In our special report on "Mergers & Acquisitions," Tire Business offers some advice and variables to consider when planning your company's — and your — business strategy for the coming years.
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We spoke with several experts in the M&A field for their perspectives on business planning and the current business climate.
One thing that has changed of late is the emergence of the private-equity industry as serious players in the tire distribution and auto repair sector.
Among the industry's top private-equity players are BayPine L.P., TSG Consumer Partners L.P. and West First Management (Mavis); Leonard Green & Partners (Sun Auto Tire & Service); Percheron Investments (Big Brands); and Meritage Group L.P. (Les Schwab Tire).
Private-equity interests back several of the leading independent tire retailers, which have grown exponentially in the past few months and years via aggressive acquisition strategies.
Even with interest rates rising and inflation soaring, this trend most likely will continue, as experts told us for this special report.
Private-equity firms didn't really enter the tire industry until 2014, when a Canadian equity company invested in Mavis. But less than a decade later, the industry is a hotbed of activity.
Why? As Sun Auto's Chris Garman told us, the tire industry is relatively "recession resistant."
"A lot of small dealers across the country don't have exit plans, and we offer a great exit plan for those owners," Garman said. "It's not a very consolidated industry — although it feels that way, it's really not. It's still very fragmented."
Another reason cited by one expert: People drive. They need tires to get them there. It is a non-discretionary purchase.
The emergence of capital-equity interest can be seen as positive for those business owners who find themselves at the "go big(ger) or get out" phase of their careers.
Garman did offer advice for dealers who are considering a sale of their shops. First and foremost, he said, make sure your shop accounting is in order, as that will dictate a selling price. In addition, make sure the facility is clean and is fully staffed.
"There isn't a better time to sell your business than there is now," Garman said. "That doesn't mean it's the right time for everybody. We run into sellers like that. ...
"Everybody should have an exit strategy."
We couldn't have said it better.