Is It Time To Sell? The 3 Rules of A Winning Exit

Are you wondering if the window for a high-value car wash exit is closing? Jeff Pavone breaks down why current market multiples represent a pinnacle for valuations and why waiting for a better deal might actually lead to a lower payout. We dive into the aggressive expansion strategies of national car wash chains and how their scale impacts local operators. You'll also learn why price is only one part of the equation, with terms and company culture playing equally vital roles in a successful sale. Whether you are looking to retire or simply take chips off the table, this guide provides the clarity needed to time your exit perfectly. 

What You'll Learn: 

• Why current interest rates and inflation suggest that business multiples have peaked. 
• The competitive advantages of large-scale car wash chains over regional players. 
• How to assess your internal succession plan and team strength before selling. 
• The importance of the 'Price, Terms, and Culture' framework in any deal. 
• Why you should interview your buyers to protect your legacy and employees. 

Timing your exit correctly can ensure your long-term financial security and peace of mind. #CarWashBusiness #BusinessExit #MandA #Valuation #Entrepreneurship

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Transcript

SPEAKER_00 0:00

Is now a good time to sell. I think we're at a point where the valuations and the multiples that we have in the marketplace today are going to be no different. If not, uh could go down, but I don't see that going up. When we look at the decision to sell or to keep or to hold, uh, it really needs to be based on where you're at in your life and how is your chain performing in the markets you're in. From a decision standpoint, you really got to look at the succession plan. You got to look at your team. Is your team strong enough to keep growing? I would say if you're not in a position to continue to grow and be a leader in your market, I probably think it's a pretty good time to sell. If you're going to do an exit, you put a lot of passion into building your company and brand, you might as well interview your buyers. And so if you can interview a few buyers, I can tell you that at the end of the day, somebody's gonna stick out and say, these are guys that we really trust and like to work with. It's not only price, but it's price, terms, and culture. I was asked uh, you know, what's the number one question uh that I was asked at the car wash show. We just got back from Nashville. And I'll tell you from the operator side, it is is now a good time to sell. And I think there's a lot of uh people wrestling with that uh question. And and so as we dive in a little bit on this thing, you know, the answer is, you know, there's there's a lot of uh depends, right? It uh I I can tell you that at a when you let's if we talk about the valuation side of it uh and multiples, um do I think things will get better when they go up? I I I think we're at a point where uh the valuations and the multiples that we have in the marketplace today are gonna be no different. Uh if not, uh could go down. But I I don't see that going up. All right. So I think from a valuation standpoint, multiples, I think right now, today, uh I think this is as good as it's gonna get for a long time to come. And and there's a risk of things going down for sure, because if interest rates um stay stay where they're at, or if not even ting up because of what's going on with inflation, uh it could it will affect, you know, multiples. So I don't I I wouldn't let that be your this determining factor. I think when we look at the decision to sell or to keep or to hold, uh really needs to be based on where you're at in your life and and how is your chain performing in the markets you're in. I can tell you the what we're seeing is that the big car wash chains are gonna get bigger and I think much bigger. And with scale, they have advantages over a small regional car wash chain. Uh right now we're seeing them dialed in. They're doing they're doing a lot of things right. Their their marketing is dialed in, their construction, their new builds. And so, you know, before we were concerned about competition building near us, uh today it's a real factor because as we see uh the larger car wash chains that are that are growing, they're mainly focused on building out their footprint. And so as their footprint, and if you've got a car wash nearby, they don't really care. Uh they'll they they'd like to get 20, 30, 40, 50 in a market uh to build up their marketing uh uh uh geography, they're gonna go ahead and do it. They're not as concerned. So if you're in a market that's got a a pathboard for people to build nearby, you've got to take that in consideration. Um you also got to look at your own secession plan. And you know, there's a lot of founders today that are getting, you know, up there in age. Um, are their kids gonna take over running the business? Who's gonna run it? Uh and so we're we're from a decision standpoint, you really got to look at the the secession plan, you gotta look at your team. Is your team strong enough to k keep growing? Uh I I would say if you're not in a position to continue to grow and be a leader in your market, I probably I probably think it's a pretty good time to sell. Uh and once you made that decision, and I don't that nobody takes that lightly because this is a lot of people's life's work. This is their brand. Uh they love their they love their employees, they love their customers. We get it, it's an emotional decision. You know, the good news is that, you know, when they do sell, some some of the fears that you had about your employees is not all bad. The the new groups coming in can offer more opportunities because they're they're going to continue to grow the chain and we'll need need more managers and more executives. So it could be an opportunity. Uh so we've seen some really positive effects to go along with obviously some negative effects of some poor poor poor leadership from uh some of these other groups that have destroyed some chains. So I would say if you're going to make that big decision, you really want to look at sort of three things, right? We we look for price, and everybody everybody wants to get the most value for what they built. Uh two, terms. Terms are not terms are are something that's negotiated. And so when you're thinking of it, let's say if you do cross that bridge and want to sell, the terms that you negotiate, whether it's from the non-compete to hold back up dollars in a transaction to reps and warranty, everything's negotiable. So you you should have somebody on your side that at least understands uh what to negotiate. The other thing, and and and probably missed by a lot of groups, is culture. And what we try to do is we try to at that point, if you're going to do an exit, um, you put a lot of passion into building your company and brand, you might as well interview your buyers. And so if you can interview a few buyers, uh, I can tell you that at the end of the day, somebody's gonna stick out and say, these are guys that we really trust and like to work with. So it's it's not only price, but it's price, terms, and culture. So that's my advice. If if there's at a point where you're thinking of holding because you think the valuations are gonna go up, that's a myth. That's not gonna happen. Uh if you're at a point in your life where, you know, I I've got a lot of people that are looking at holding on and and really keeping trying to get the last bit of juice out of their out of that business, I've got to tell you that's kind of a mistake to make because at some point when you sell, you can take that cash, that money can get invested, uh, you can sleep at night, not worrying about somebody who's gonna encroach on you, or or let's say a year from uh, you know, whatever, something in the world, inflation keeps going up, interest rates go up, or whatever, and there is no clear exit. So timing, timing and exit, there's no there's no direct science to figuring that out. There's a ri if there's a risk. So at the risk of your future happiness, if if if making a decision sooner than later, I can only tell you today. The good news is that multiples are are still very attractive and that buyers are moving forward at trying to get deals closed. You know, what per what happens next year, we just don't know. So that is my advice if you're if you're asking that question. It it all depends on what your team succession plan looks like and and how you're embedded in your marketing community. There are some unbelievably high-quality chains that don't have to worry about uh problems with encroachment. You know, you got groups like Crew Car Washington Indianapolis, you got uh Metro out of Boise. I mean, these are these are great run chains. They they don't have they don't have to ask that question. They can sell when they when they want to. On the other hand, if you're in a market that's you know, take Texas or some other market that's got a lot of deep uh competition, at that point you may want to really think seriously about uh holding on too long because that encroachment becomes uh problem when you do decide to exit. Thank you.