SELLING AN EVENT RENTAL BUSINESS
As an event rental business owner, you may be interested in selling for a number of reasons. You may have grown the business to your goal size and are ready to move on. You may have a personal or family obligation that prevents you from continuing your business at the same pace. You may have a new opportunity to do something else and want to liquidate your rental business so you can make a different investment. Whatever your reason for making a change, when you’re ready to sell your rental business, you’ll want to consider these tips:
Consider selling your business, not just your inventory
You’ve built more than just a collection of stuff. You have a brand, a recognizable name, an Instagram following, referral relationships from other vendors and event planners. All of those intangibles are valuable too! When selling your rental business, consider the value of your business as a whole, not just the value of the assets in your rental collection.
The more you have written down about your business and Standard Operating Procedures, the more valuable your business will be. Handing a new owner an “operating manual” is worth a lot more than just tossing them the keys to your warehouse and shouting “Good Luck!” Buyers are interested in knowing how to do things. If you haven’t been documenting your processes, start now with a tool like Guru.
You’ll also need to consider how long you are willing to train a new owner and/or be available for questions after the sale. If you don’t want to be getting calls 3 months after the transfer of ownership about how to deal with damages, you need to be upfront about it.
Know your Utilization
If your collection is moving off the shelves like hotcakes, it is going to be worth more to a new owner than stale inventory that’s mostly collecting dust. Demonstrate your collection’s Utilization (both Dollar and Time Utilization) with reports and graphs (RW Elephant includes these in all of our plans). Showing the real return-on-investment to a potential buyer will go far.
Put together a One-Sheet for your Listing
If you are serious about selling your business, put together a one-page PDF that includes the Regions you serve, Location (including warehouse sq. footage if applicable), Year Started, Value & Description of your Rental Collection, Revenue, EBITDA, Details of the Sale (what it includes and excludes; real estate, vehicles, collection, staff, accounts receivable, etc.), Asking Price, Terms of Sale, and Contact Info
RW Elephant is happy to put together a complimentary Business Listing One-Sheet on your behalf. If you’d like for us to do that, please fill out this form. We’ll put together the PDF and send it over for your approval. After you give the thumbs up, we’ll send it out to our network of interested buyers on your behalf.
Decide whether or not you want to sell anonymously
Sometimes it can feel sensitive to let people know you’re interested in selling your business. You can always use a broker to start spreading the word or find interested buyers for you. If you want to remain anonymous and attract some buyers on your own, consider setting up a generic email address like email@example.com. When interested parties email you there, you can decide who you want to send the info to.
You may also want to set up a consultation call with Allison Howell (CEO of RW Elephant) to talk more about business valuation, finding the right buyer for your business, and planning your transition. She has experience walking through this process with event rental pros and can help you define the right path for you. She doesn’t act as a broker but can be a helpful advisor as you go on this journey. Schedule your consultation call here.
BUYING AN EVENT RENTAL BUSINESS
Buying an event rental business can be a great investment. Depending on your region, event rentals can happen seasonally or throughout the year. There is tremendous growth potential and rentals are a highly scalable operation— your collection can make you money at multiple events simultaneously. If you’re interested in buying an event rental business, you’ll want to keep these things in mind:
Age of Inventory
Inventory in an event rental collection can last for a number of years but you’ll likely want to find a collection with an average age of two to three years. That gives you at least two to three years of rentable life still left in the pieces before they need to be retired or replaced. If the collection you’re buying is vintage, you’ll need to adjust accordingly.
Owner’s Salary or Draw
Many inexperienced event rental business owners may not have calculated their own salary or draw correctly when determining their EBITDA. You’ll want to make sure you get the straight story on how much profit has come out of the business AFTER the owner has paid herself or himself. While there is a lot of profit potential in event rental businesses, you’ll want to make sure you have an accurate picture of your financial position before diving in.
As you consider a rental opportunity, take a look at the market the business is in. What is its current reputation? Does it have room to expand and rent even more in the existing region? Has it saturated the market? Are there a lot of competitors? Is there potential to expand to additional adjacent regions? Many first-time rental business owners don’t squeeze everything they have out of what they’ve got so there may be a tremendous amount of untapped demand just waiting for you to meet.
If you’re interested in receiving our latest Listings of Rental Businesses for Sale, join our list here.