Beekeepers play an important role and have a sustainable business model that often receives generous valuations. This review discusses how to value and sell a beekeeping business.
About The Beekeeping Industry
Beekeepers, whose business model involves raising bees, collecting honey, selling queen bees, bee packages, royal jelly, bee’s wax, pollen, and other bee products, are part of a unique industry. There are three types of beekeepers — hobbyists, part-timers, and commercial operations. Approximately 40 percent of honey production comes from hobbyists and part-timers, and roughly 1,600 commercial operators account for the rest of the honey production (Business Reference Guide). Here is the most recent data for the beekeeping industry:
- There are approximately 15,600 beekeeping businesses in the U.S.
- There was a -3.0% annual growth for the beekeeping industry from 2018 to 2023
- The beekeeping industry generates $68.1 billion in annual revenue
- The annual profit for the beekeeping industry is $3.3 billion
- Experts predict an increase in annual growth (1.3%) from 2023 to 2028
Increased demand for bee pollen is expected to fuel the industry growth for beekeepers. Some domestic beekeepers fear imports from South America affecting their revenue and profits. Imports are largely responsible for the decline in growth since 2018, but the industry is expected to bounce back as the U.S. government cracks down on illegal imports.
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How to Value a Beekeeping Business
A market approach for business valuations is strongly recommended for beekeepers who are considering selling their operations. This involves the use of your gross profit and annual net sales along with industry multiples (also known as rule of thumb data). You can see the rule of thumb data below. Of course, non-financial considerations are also weighed during the valuation stage, such as your growth potential, bee product quality, and reason for selling.
- Beekeeping businesses sold for approximately 1.95 times their gross profit
- Beekeeping businesses sold for approximately 0.87 times the annual net sales
Your broker may also consider your seller’s discretionary earnings (SDE) and earnings before interest, taxes, depreciation, and amortization (EBITDA), although the rule of thumb data for SDE and EBITDA are not as well documents.
How to Sell a Beekeeping Business
The sales process for beekeeping businesses is easier if you break it down into smaller steps. This helps simplify the many complexities you will face throughout the process. Notably, the steps include:
- Determine the worth of your beekeeping operation
- Establish your exit strategy goals
- Prepare your legal and financial documents
- Bring your beekeeping business to market
- Negotiate a deal with a buyer you trust
- Allow the buyer time to complete the due diligence process
- Schedule a time for closing and complete the sale process
Below is a more detailed description of each step. Keep in mind, your process may look different depending on the specifics of your operation and your business broker’s strategy.
Determine The Worth of Your Beekeeping Operation
Your goal is to sell at or above fair market value without having your business sit on the market for an extended amount of time. The best way to ensure this is the case is to properly value your beekeeping business with a professional valuation.
Establish Your Exit Strategy Goals
You should also establish your goals before you begin the sale process. This may include goals such as maximizing the sale price, minimizing tax obligations, ensuring your bee colonies are protected, and keeping your employees and workers.
Prepare Your Legal and Financial Documents
It helps to prepare your legal and financial documents ahead of time. This will save you headache later in the process when a prospective buyer requests documents, especially during the due diligence and closing stages. The documents you need to collect include:
- Tax returns
- Profit and loss (P&L) statements
- Balance sheets
- Vendor contracts and lists
- Insurance information and policies
- Property ownership or lease information
You may need additional documents as well (every beekeeping business is unique). Your broker, attorney, and CPA can assist you with determining your document needs and arranging their collection.
Bring Your Beekeeping Business to Market
Your broker should handle much (or all) of this process for you, although they should also keep you involved throughout the process. It is important for your broker to handle this process rather than you (the owner) because they must maintain confidentiality. A private and discrete sale process is important for both the seller and prospective buyers during a business transaction..
Negotiate a Deal With a Buyer You Trust
Your broker screens prospective buyers as they make offers, along with assisting with negotiations and contingency planning. Ultimately, you should select the buyer you feel is best for your beekeeping company’s future and allows you to best reach your other sale goals. This stage ends with a signed letter of intent (LOI).
Allow The Buyer Time to Complete The Due Diligence Process
The buyer must have an opportunity to verify financial and legal information about your beekeeping business. This can take several weeks to more than a month. Your broker will work to ensure it goes well and as quickly as possible. During due diligence, you (the seller) can expect to provide documents (such as those mentioned above), answer questions for clarification, and allow the buyer to tour your beekeeping operation.
Schedule a Time for Closing and Complete The Sale Process
You will need to schedule a time to close the sale at a time that works for all who must attend, including the seller, your attorney, and the seller’s attorney. (The broker may attend as well, although this is not always necessary.) You will then complete the sale process by attaining the final signatures of the purchase agreement, confirming that the payment has been successfully sent, and transferring ownership of the company to the buyer.
Speak With a Professional Business Broker at Sigma Mergers and Acquisitions
The sales process for beekeeping businesses begins with a business valuation. Sigma mergers and Acquisitions prides itself in providing honest and accurate valuations. Our process involves a close examination of the intrinsic value of your beekeeping business, ensuring the unique (and often non-financial) factors your business provides do not go unnoticed. Schedule a consultation today to get started.
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!