Billiards companies are still receiving excellent valuations despite a recent downturn in industry performance. Many experts and prospective investors are predicting an industry recovery, and there is demand for established billiards companies. This guide is designed for billiard company owners who are interested in a professional valuation and/or are planning their exit strategy.
About The Pool Hall and Billiards Industry
The pool and billiards industry provides recreational services. Primarily, they offer pool and billiard tables for rent within their establishment. Many pool and billiards halls also offer food and beverage (F&B) services, although it is typically far more limited than a full-scale restaurant. Many establishments also prioritize nightlife activity and remain open late and on weekends. The most recent statistics and projections for the billiards hall industry are:
- There are approximately 843 billiard halls in the U.S.
- There was a substantial decline in annual growth (-9.2%) for the pool and billiard industry from 2018 to 2023
- The pool and billiard industry generates $637 million in annual revenue
- The annual profit for the pool and billiard industry is $69.5 million
- Experts predict an increase in annual growth (2.3%) from 2023 to 2028
The billiards industry has declined mightily over the past five years. The decline is largely driven by increased external competition for consumers. In other words, there are simply more recreational opportunities available. The recent decline in employment rates has also contributed to an industry decline. The good news is many experts are predicting a sizeable recovery for the industry as employment rates improve and the billiards industry adapts to offer more opportunities for younger audiences.
How to Determine The Value of Your Billiards Company
Billiards companies often receive excellent valuations up to as much as four times the company’s seller’s discretionary earnings (SDE). Ultimately, your financial information and rule of thumb data play a major role in your value, along with your unique competitive advantage, growth potential, location, and the quality of your pool and billiard tables (and other equipment and inventory). Here is the rule of thumb data for the billiards industry:
- Billiards company sold between 2.52 and 3.94 times the Seller’s Discretionary Earnings (SDE)
- Billiards company sold between 3.25 and 4.14 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
- Billiards company sold between 0.53 and 0.73 times the annual net sales
How to Sell Billiards Hall in 8 Steps
You can sell your billiards hall business by following a step-by-step process that is proven to work. Of course, your sale may look different as no two companies are the same. However, the common steps involved in the sales journey are:
- Choose a business broker
- Receive a professional business valuation
- Determine your asking price and timing
- Prepare your documents
- Create a sales memorandum
- Confidentially market your company
- Negotiate with buyers and plan contingencies
- Close the sale and transfer ownership
Given the complexities involved with selling a billiards hall company, we strongly recommend seeking advice from a business broker before you begin.
Step 1: Choose a Business Broker
First and foremost, you should choose a business broker that you feel is best to assist you. Ideally, your broker should have experience in your state and local region and within your industry. You should also find a broker that understands the intrinsic value of your company and is capable of getting the most value during a sale.
Step 2: Receive a Professional Business Valuation
Your broker will first put together a professional business valuation with a market approach (as discussed above. This determines your billiards company’s fair market value, which plays a major role in your strategy overall.
Step 3: Determine Your Asking Price and Timing
Based on your valuation and the current state of the market, you may decide to market your company immediately or wait until the market is more generous for sellers. Your asking price is also established during this third step.
Step 4: Prepare Your Documents
Next, you should prepare your legal and financial documents. Your broker should provide you with a list of all you may need throughout the sale. In general, this includes your:
- Tax returns (3+ years)
- P&L statements
- Cash flow statements
- Balance sheets
- Inventory list
- Insurance policy
- Lease or real estate appraisal
Of course, this is not necessarily an all-inclusive list. You should ask your business broker about the specific documents you should collect. They, along with your attorney and CPA (if applicable), can help ensure you have all you need to complete the sale.
Step 5: Create a Sales Memorandum
A sales memorandum, or sales memo, is the initial document you provide to prospective buyers who may be interested in purchasing your pool hall company. Your sales memo includes the details of your company and highlights the value your company offers. Your broker and attorney can assist with the creation of your sales memo.
Step 6: Confidentially Market Your Company
Your broker then brings your billiards hall business to market. This is done in a confidential manner so news of the sale does not go public. Your broker screens offer as they arrive to ensure the potential buyer is qualified and the offer is legitimate.
Step 7: Negotiate with Buyers and Plan Contingencies
Negotiations are a crucial part of the sales process that you should ensure is done properly. Your broker should work to negotiate terms that allow you to reach your financial (and non-financial) sales goals. Contingencies may also be established during this step as well.
Step 8: Close the Sale and Transfer Ownership
Lastly, you will close the sale, which involves signing the purchase agreement and confirming that the payment has been sent and received. You will also need to transfer ownership of your billiards company to the buyer, which may involve updating legal information as well as your lease and insurance policy. You will also need to notify employees of the ownership change.
Plan Your Exit Strategy With Sigma Mergers and Acquisitions
With decades of experience and more than 600 businesses sold, we have the experience and qualifications needed to reliably sell your pool hall or billiards hall business for fair market value. If you have questions, concerns, or are ready to get the sales process started with a free business valuation, schedule a consultation with us here at Sigma Mergers and Acquisitions.
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!
