Getting Down to (Leave the) Business
Selling your business, regardless of the industry, is always a daunting proposition. Selling a family business can be even more difficult.
In addition to sorting out logistics, parting ways with an institution you or a close family member helped to build from the ground up, leaving team members who have been with you for years and sometimes decades, adds even more weight. But sometimes it’s the only move that makes sense.
Joe Benza, a former quick lube operator in North Carolina, and Michael Meuret, a former operator in Idaho, had similar paths that led to the sale of their businesses. Both started in quick lube in the ‘90s working for their dads. Both were ambitious, and by the end of the 2000s, they were managing several stores in their own chains.
And it was around the same time that both decided to sell.
For Benza, who managed six Fast Lube Plus locations with his dad, selling wasn’t really on his mind when FullSpeed Automotive first approached him with an offer in 2018.
“We were not for sale, but dad was getting near retirement and we were planning for succession. The offer that was presented to us was a good one and it was one of those ones you don’t say ‘no’ to,” he says.
For Meuret, whose Einstein’s Oilery chain had reached 12 locations by 2019, had been contemplating retirement. Pressed by the pandemic and other personal circumstances around the start of 2020, plus an aggressive offer from Valvoline Instant Oil Change, he knew it was the right time.
“Good can be good enough,” Meuret says. We ultimately asked ourselves ‘how much more do we need? How much more do we want? Our families are the priority.”
Though both had different circumstances leading up to their respective deals, both reached the same conclusion: It was time to sell
Larger companies looking to acquire your business don’t have a one-size-fits-all approach to starting negotiations. Regardless of the circumstances, though, once the decision is made to sell your business, it’s imperative to have every record in your shop organized and easy to access, down to the last penny.
The duration of an acquisition can vary significantly, but three to six months is a fairly normal length of time.
During the initial negotiations, buyers will want to do their due diligence and come up with an estimated value of your business. Benza says it’s common for sale prices to be based on your business’ EBITDA, which is a metric that measures a company’s cash flow based on earnings before interest, taxes, depreciation and amortization, though that’s not the only metric used.
In that time, the buyer will usually submit an intent-to-purchase document. That doesn’t lock the buyer or seller into the deal, but Benza says it gets the ball rolling.
Once that’s done, the buyer and seller will submit an asset sale agreement.
“You should have an attorney, a very experienced business acquisitions attorney, reviewing those documents. There’s a lot of conditions on a sale and a lot of liability that carries after a sale that you have to be aware of, and you need an attorney to vet those documents,” Meuret says.
News of a business possibly being sold can affect how employees and customers handle day-to-day operations. Even though the owner is looking to move on to a different opportunity, employees and customers are still reliant on that business. If word gets out before a sale is finalized, it can be a detriment to both employee morale and overall sales.
For Benza, who wasn’t actively trying to sell his business before FullSpeed came with the offer and maybe would have kept the business if the sale fell through, word that the owners were looking to get out could have had a negative impact.
Meuret says it was a tough balance pushing forward through the sale while also making sure that his employees were treated fairly and didn’t feel like “the rug was being pulled out from under them.”
“Our people were the biggest part of our success, and it was extremely important to us that they were treated well in the transition,” he says. “You can’t control everything, but you want to make sure that your people...are given a fair chance. Hopefully the business that is buying you shares your values.”
During the initial negotiations, signing a non-disclosure agreement is common. That meant, however, Benza’s team didn’t find out until the sale was finalized.
Meuret says that’s common, though, as buyers will usually want to control the flow of news during a sale.
“During the due diligence process, there is no commitment to buy,” he says. “The earlier your employees, your staffing or even your customers are being told that you’re selling your business, the more likely that it will cause a disruption in your business.”
Finalizing the Deal
Once the sale is finalized, the buyer will start the transition process. Since Benza was joining FullSpeed Automotive’s corporate team, he says they were very open and transparent about how the transition would work and what was expected.
For Meuret, who wasn’t joining Valvoline, there wasn’t as much communication with corporate. They helped make sure everything stayed confidential “as to not raise any red flags,” but aside from that left Meuret to take care of his business and them to take care of theirs.
“Valvoline, like any buyer, was looking to protect their position,” Meuret says. “That’s just the matter of perception. They’ve got attorneys and teams that gather documents, but at the end of the day, the burden is on you to review their documents.”
A buyer will usually handle updating machines, rebranding, on-boarding if they’re keeping employees around and any other necessary tasks, but both Benza and Meuret say having your team ready for the sale and having one or two key members helping with the transition to new ownership in place will help ensure a smoother transition.
A Done Deal
Though Benza’s and Meuret’s paths diverged after the sales—Benza is now working with FSA Corporate while Meuret is enjoying retirement—both say it was the right decision.
“You take the good with the bad, and you learn as you go,” Benza says. “These sales are always complicated. There’s emotions involved, a lot of moving parts. It’s not easy, but if I had to go back, I’d do it again because it was the best thing for our family at the time.”
Meuret says making sure your team is taken care of should be the No. 1 priority. After that, learning to roll with the changes and not get overwhelmed is the best thing to do.
“Don’t get stuck in the weeds when you’re selling. There’s a lot of details, a lot of information, a lot of legal jargon that can be very intimidating,” Meuret says. “Let the attorneys go to work. Be willing to be flexible and expect that from the other side.”