If you have successfully owned and operated an appliance store (or multiple appliance stores) and are now planning your exit strategy, this guide is for you. We discuss how you can determine the value of your appliance store, how to sell an appliance store, and the benefits of working with a business broker to ensure you receive fair market value.
About The Appliance Industry
The appliance store industry retails household appliances such as washers and dryers. However, the retail of technology appliances such as computers, televisions, etc. also fits into the appliance industry. This is in addition to providing repair services for appliances, among other service types. According to Business Reference Guide, 95% of homeowners report using a major appliance regularly, and 53% of homeowners report malfunctions within every five years. These insights reinforce the trend of sustainable growth in the appliance industry.
How Much is My Appliance Store Worth?
You will need to determine the value of your appliance store before you start the sales process. More specifically, you should determine the current worth of your appliance store as well as its potential worth in the future. This is because not every appliance store should sell immediately, and you may decide to take steps to improve your valuation before selling. As is the case with all business valuations, the acquisition multiples are a primary determining factor in determining your value. The rule of thumb data for appliance stores include:
- Appliance stores sold for approximately 2 times the monthly sales plus inventory
Of course, your valuation goes far beyond this rule of thumb. Your business broker will review your financial information, geographic location, growth potential, the condition and quality of your inventory and equipment, and much more to determine the value of your appliance store.
What is The Sales Process for an Appliance Store?
A pre-established sales process can help your journey go well. We recommend speaking with a business broker before you get started; they can help you personalize your strategy. In general, here are the stages you can expect throughout the sales process:
- Business valuation
- Sale preparation
- Due Diligence
Within each stage, there are a range of steps and complexities. Your business broker, attorney, and CPA professional can help you successfully navigate the sales process. Below is a general overview of each of the five main steps involved with the sell of an appliance store.
Stage 1: Business Valuation
The first step is to determine your fair market value with a professional business valuation from an experienced business broker. This tells you how much prospective buyers will pay for your appliance store.
Stage 2: Sale Preparation
You can prepare for the sale of your appliance store by collecting financial documents and discussing your sales strategy with your team (lawyer, broker, CPA, ownership partners, etc.).
Stage 3: Marketing
The next step is bringing your business to the market. You must ensure confidentiality throughout the sales process; your business broker can help ensure this is the case. Your broker maintains confidentiality by finding prospective buyers and receiving offers through private channels. For example, they may have industry connections that connect them with an investor willing to make a competitive offer for your appliance store. Business brokers also have access to databases and networks that allow them to present your sales memorandum to hundreds of prospective buyers.
As you receive offers for your business, your broker screens them to ensure they are quality offers that allow you to reach your sales goals. They can discuss each offer with you and help you zero in on the offer and buyer that is best for you and the future of your appliance store.
Stage 4: Due Diligence
Due diligence allows the buyer to review the details of your appliance store, verify the financial information, and conduct other assessments they feel are essential before they complete the sale. The buyer will also conduct a walk-through of your appliance store (and all relevant facilities). As the seller, your goal during due diligence is to promptly provide requested documents and remain transparent with the buyer so they can feel comfortable with the sale. This allows you to minimize the time between the letter of intent (LOI) and purchase agreement.
Stage 5: Closing
Finally, the last step. Your sale’s closing is an exciting time. However, it is vital to take this step seriously as there is still more work to do. Of course, your attorneys and your business broker can help you prepare for closing. They both may be there at the table with you as well. During closing, you can expect to:
- Review the purchase agreement
- Attain the final signatures
- Start the business transfer
- Confirm the payment
For many, this is the last step of their exit strategy overall. If you sign a non-compete agreement, you may have certain limitations as it pertains to your professional opportunities. However, with respect to the non-compete agreement, you are free to start the next chapter of your life, whether it is starting a new business, joining an existing company, becoming an investor, or enjoying retirement.
Determine The Value of Your Appliance Store With Sigma Mergers and Acquisitions
Sigma Mergers and Acquisitions helps appliance stores and other business types sell for fair market value (or above). You can start the process with a professional business valuation. Schedule a consultation with our business broker to learn more and 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!