The bed and mattress industry is in a good place with excellent growth projections. Additionally, since the market is no longer dominated by a few big brands, it has created an interesting market for various manufacturers and shops that offer a variety of brand options. Below is a detailed guide on how to sell a bed and mattress store.
About The Bed and Mattress Industry
The bed and mattress industry retails household furniture such as mattresses, couches, etc. Many also retail outdoor furniture such as outdoor sofas and lounge chairs and office furniture such as desk chairs. However, as mentioned, they primarily sell new beds, including springs, mattresses, headboards, etc. Here is the most recent bed and mattress industry data:
- There are approximately 12,500 bed and mattress stores in the U.S.
- There was a 0.9% annual growth for the bed and mattress industry from 2018 to 2023
- The bed and mattress industry generates $12.9 billion in annual revenue
- The annual profit for the bed and mattress industry is $542.4 million
- Experts predict a sizable increase in annual growth (2.1%) from 2023 to 2028
Gone are the days when only a few manufacturers dominated the market. The industry is now dispersed among hundreds of different brands. Additionally, there is an increased desire for luxury mattresses, which leads to more revenue and profit within the industry and offers more potential for investors who are looking to purchase a bed and mattress store.
How Much is My Bed and Mattress Business Worth?
You will need a professional valuation to determine the value of your bed and mattress store. This involves the use of your seller’s discretionary earnings (SDE) and rule of thumb data, along with adjustments based on your growth potential, unique competitive advantage, quality of your beds and mattresses, quality of your workforce, and your reason for selling. Here is the rule of thumb data for the bed and mattress industry:
- Bed and mattress stores sold between 1.61 and 4.03 times the Seller’s Discretionary Earnings (SDE)
- Bed and mattress stores sold between 1.84 and 2.83 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). Some larger and more established bed and mattress stores sold for 10.26 times their EBITDA
- Bed and mattress stores sold between 0.31 and 0.38 times the annual net sales. Some larger and more established bed and mattress stores sold for 0.80 times their annual net sales
How Do I Sell a Bed and Mattress Business?
Every sale is unique, which is why we recommend a personalized sales strategy for bed and mattress businesses. However, there are common stages you can expect. Here are the stages involved with selling a bed and mattress store:
- Prepare for the sale
- Market your store in a confidential manner
- Allow the buyer an opportunity for due diligence
- Close the sale and transfer ownership of the shop
Stage 1: Prepare for The Sale
All too many sellers find themselves scrambling to collect documents at the last second, which often leads to deals falling through during the due diligence stage, difficulties with negotiations, and delays during the closing process (among other complications and setbacks). We recommend preparing everything you need ahead of time with the assistance of your business broker, attorney, and CPA. The most notable documents you will need to collect for your bed and mattress store are:
- Three years of tax returns
- Profit and loss statements
- Business registration documents
- Lease/property ownership documents
- Inventory and equipment lists
- Employee lists and information
- Insurance policy and information
- Contracts with suppliers and vendors (if applicable)
You should also establish your exit strategy goals, timeline, and sales strategy during this first stage of the sales process. Your broker can assist you with all tasks and ensure you are in a strong position for a successful sale.
Stage 2: Market Your Store in a Confidential Manner
Your broker conducts much of the legwork for the marketing phase. This includes presenting your bed and mattress store to prospective buyers, fielding and reviewing offers with you, negotiating on your behalf, planning contingencies with the seller, and having the buyer you choose sign a letter of intent (LOI) to establish their intent to purchase your bed and mattress store. All of this is done in a confidential manner so that news of the sale is not leaked before a deal is finalized.
Stage 3: Allow The Buyer an Opportunity for Due Diligence
Due diligence is the stage in a business sale after the letter of intent and before the purchase agreement is officially signed (see below). The due diligence process involves a number of steps. During this stage, the following may occur:
- The buyer requests and reviews documents (i.e. tax returns, etc.)
- The buyer provides a list of questions for the seller to answer
- The buyer conducts a walk-through of the bed and mattress store
- The buyer meets with other owners, executives, and employees that are essential to the company
This stage should follow a structured process, and the buyer’s business broker should lend a helping hand in ensuring all goes smoothly and efficiently.
Stage 4: Close The Sale and Transfer Ownership of Your Bed and Mattress Store
Closing the sale is the final stage. This is an exciting time as you are close to completing your exit strategy and moving to the next chapter in your life. However, it is important to remain focused and prepare adequately for closing. Your broker and attorney can assist you with preparing the documents you will need for closing. As it pertains to the transfer of ownership of your bed and mattress store, this may involve updating insurance, financial, and legal information, providing full access to the store and all related facilities and online resources, notifying employees and customers, and helping ensure a smooth transition in day-to-day operations.
Contact The Pros at Sigma Mergers and Acquisitions
Sigma Mergers and Acquisitions has decades of experience helping business owners sell in a stress-free and successful manner. Feel free to reach out to us and schedule a consultation to learn more about the sale process for your bed and mattress store and to receive a no-cost, no-obligation business valuation.
Scot Cockroft is the Owner & President of the #1 ranked Business Brokerage, Business sales and M&A firm in Texas. Scot has been named Named Deal Maker of the Year by Dallas Business Journal.
He is committed to a “different” type of business brokerage firm, one that is NOT about a sales pitch but, rather, results! In short, a business brokerage firm that is committed to performance-based compensation. Scot believes in these principles as well as a candid honesty with clients. His candid style often takes buyers and sellers by surprise, but is often what assures successful connections between the two.
Feel free to reach out!