Don't Turn the Key and Walk Away!
By Bill Sendelback
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During the oil crises of the late ’70s and early ’80s, wood stove dealers opened shop in almost every community in North America. Most continued to grow into full-fledged hearth products dealers, and a bit later, many added grills, upscale patio furniture, and other outdoor living products. Still others added a wine department, or ski equipment, or even a gun shop.
Now, after almost 50 years for some, many of these pioneer hearth product dealers want to retire. The problem is that most don’t have a clue how to sell their business. As a result, too many hearth product dealerships are being closed and liquidated. But the Hearth, Patio & Barbecue Association (HPBA) is offering a professional way for dealers to sell their business and to enjoy the fruits of their many years of labor.
When past HPBA chairman Joe Burns took office in March, 2019, he had two objectives in his sights: to find a way to help dealers successfully sell their businesses, and to bring new people into the industry.
“There has been an unfortunate trend of hearth product dealers closing down, a trend that is not good for our industry as we not only lose those dealerships, but we lose those people. This could be a real problem down the road for our industry.”
With dealerships being sold rather than closed, he says, new buyers are likely to bring new people into the industry; they are also likely to maintain the business as a hearth shop. “But until now, dealers have had no idea of how to sell their business or where to go,” he says.
In the spring of 2019, Burns learned about Sunbelt Re-sales, a North American business broker, from an HPBA member dealer who had used Sunbelt to sell his dealership. So Burns and the HPBA contacted Sunbelt to begin the process of developing a resale program for HPBA-dealer members.
“We had three requirements for a broker,” says Burns. “The broker must cover North America; it must specialize in retail businesses, and it must offer complete, comprehensive services to make the sale as easy as possible for our dealers.” That program was finalized by the HPBA with Sunbelt in October, 2019, and now is available to HPBA dealers.
Sunbelt Re-sales is a division of Sunbelt Brokers, the world’s largest business brokers, selling more than 1,000 businesses a year, with 140 franchised offices throughout North America.
“Selling your business is probably the single biggest financial venture a dealer may have,” says Terry Kelm, president of Sunbelt Re-sales. “We handle everything for the sale from an initial no-obligation conversation to all aspects of analyzing, researching, and marketing of the business through the completion of the sale.”
The seller enters into a 9- to 12-month contract with Sunbelt. “Sales usually are completed in six to nine months,” says Kelm. “Currently our average is eight months.” The total costs for Sunbelt’s services vary from 10% to 12% of the sales price, he says. “But we only get paid when the sale is completed.”
“We don’t believe in a cookie-cutter approach,” says the wording on Sunbelt’s website, “but in a structured methodology that is designed to bring offers to the table while maintaining confidentiality and minimizing business interruptions. We want to get your business in position to be sold for the best price and in the shortest time frame.”
“A huge part of this process is staging of the business, like staging a house for sale,” says Kelm. “You may need to make adjustments to your business to make it more salable at a higher price. We want your business to stand out from the crowd.” Kelm emphasizes this by pointing out that 78 million Baby Boomers soon will be retiring, and as a result they will be “saturated” with businesses for sale.
Sunbelt works with the seller to prepare the business for sale. The business is analyzed, adjustments made to the business if needed, a value or sales price is agreed upon, and a marketing plan is finalized and put in place. Potential buyers are screened, and offers are interpreted and negotiated before being presented to the seller along with an evaluation of the pros and cons of each offer.
Once an offer is accepted and finalized by the seller, Sunbelt coordinates the due diligence process, working with accountants, attorneys, and lenders. Finally, Sunbelt prepares the closing documents and the logistics of the closing of the sale.
The HPBA conducted one webinar on the Sunbelt program in which 20 dealers participated. As a result of the webinar, three HPBA dealers signed up with Sunbelt for the program. More webinars are planned. Sunbelt’s Terry Kelm conducted a seminar at the HPBExpo in New Orleans. Details of the Sunbelt program are on the HPBA website.