Full-service print shops remain in high demand; AlphaGraphics is one of the largest players in the industry. This guide offers an overview of how to sell an AlphaGraphics franchise or a full-service print shop business if you intend to do so as a part of your exit strategy.
About The AlphaGraphics Franchise
There are approximately 240 AlphaGraphics franchise businesses in the United States. AlphaGraphics specializes in visual communication that displays specific messages. The services for AlphaGraphics include printed materials, advertising, packaging, signage systems, logos, and other graphic design and print services. More generally, there are more than 2,100 full-service print shops in the United States.
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How Much Is an AlphaGraphics Franchise Business Worth?
AlphaGraphics franchises have relatively good value compared to other industries. They also have higher valuations than most independently-owned full-service print shops. However, many full-service print shops have shown equal or greater valuations. Many factors determine the value of your store, such as your local reputation. However, acquisition multiples and financial information such as SDE, EBITDA, gross profit, and net sales are the most utilized metrics.
Here is the rule of thumb data for AlphaGraphics franchises:
- AlphaGraphics franchisees sold between 2.15 to 3.65 times the Seller’s Discretionary Earnings (SDE)
- AlphaGraphics franchisees sold between 0.44 and 1.42 times the annual net sales
- AlphaGraphics franchisees sold between 4.77 and 14.60 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
A Step-by-Step Guide to Selling Your Alphagraphics Franchise Business
You should have a clearly defined process for selling your AlphaGraphics franchise store or full-service print shop. This should include a personalized strategy. However, there are common steps to expect, which are discussed below.
Stage 1: Prepare and Create a Personalized Sales Strategy With Your Business Broker
As mentioned, you should have a personalized sales strategy. This means your experience is likely different from other AlphaGraphics franchisees. During the first stage, you and your team, along with your business broker, CPA, and attorney, can work together to develop a personalized sales strategy that helps you reach your goals for the sale for fair market value.
Of course, although the highest sale price is often the primary goal, there are other goals that you may have. For example, you may find it essential that the new owner continues its commitment to the community and keep your existing employees. These details are discussed during the first stage when selling your AlphaGraphics franchise business.
After establishing your personalized sales strategy, the next step is to prepare the documents you will need throughout the process. This includes (but is not limited to) your tax returns, profit and loss statements, balance sheets, copies of your current lease, professional certificates, client contracts, and insurance policies. Gathering these documents beforehand helps ensure a speedy process during negotiations and due diligence.
Stage 2: Allow Your Business Broker to Leverage Their Contacts and Networks to Find a Buyer
Selling an AlphaGraphics franchise business is different from selling a house, car, etc. You cannot simply stick a for sale sign in front of your storefront and find a buyer. Instead, selling your business requires confidentiality. Your business broker should understand how to protect your confidentiality throughout the sales process. By doing so, you can help ensure that your customers and employees do not catch wind of the business sale, which could otherwise impact your profitability, value, and business operations.
More importantly, business brokers have access to networks and databases that connect them with potential buyers. These are typically private networks upon which the broker can advertise your business discretely. Business brokers also have numerous contacts that can help them find a qualified buyer for your business.
Stage 3: Negotiations, Contingencies, Letter of Intent, and Due Diligence
This next stage encompasses multiple processes. For the seller, the goal is to minimize the time between finding a qualified buyer and closing. This is because each passing day increases the risk of something going wrong that compromises the deal, such as the buyer’s plans changing, industry-wide announcements, etc. With that said, this is an essential stage.
Negotiations are a vital part of this stage; this is the process of settling on a purchase price and other sell agreements (i.e. whether to keep existing employees, etc.). This process is often riddled with emotions and tough conversations. Consequently, it is best to let your business broker work on your behalf as they have experience navigating these tough talks and finding you the best price.
Contingencies are built-in agreements that protect the buyer and seller throughout the sales process. Once you and the seller complete negotiations and establish contingencies, you can begin due diligence. The seller signs a letter of intent (LOI) that establishes their intent to buy your AlphaGraphics franchise business. As the seller, your focus during due diligence should be on transparency, providing requested documents, and answering inquiries and questions quickly. The best way to ensure you can accomplish this is through your preparation (see stage one).
Stage 4: Closing The Sale and Starting The Next Chapter of Your Life
Closing is an exciting time — the last step before entering into the new chapter of your life. However, the work is not done. The seller will bring their attorney to the closing table, and you will bring yours. The purpose of their presence is to review the document and ensure there is nothing that gives either party pause. This process is all too often more intense than either party desires.
The business broker can help this process go smoothly by clarifying ambiguities and keeping each party well-informed during closing. Closing ends with final signatures, confirmation that the payment for the business is sent, and the start of the business transfer to the seller. A plan to notify employees, transfer policies, etc. are also discussed during closing (if not before closing). After everything is settled, the seller can head off to the next chapter in their life, whether it is to enjoy their retirement or start working in a new industry in a manner that does not violate the non-compete clause (if applicable).
Sigma Mergers and Acquisitions Can Help You Sell Your AlphaGraphics Business
If you are a franchisee of an AlphaGraphics store and are considering selling, then we are here to help you through the process. We start with a consultation and a free, no-obligation business valuation to help you decide if now is the right time to sell. If you choose to move forward, then we are there to assist you and your team every step of the way.
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!