LAS VEGAS – The prices that buyers are paying currently for good convenience store sites are edging toward all-time highs of 8, 9 and 10 times EBITDA. A big part of that has been the move to an MLP (master limited partnership) structure that several retailers have accessed recently to gain tax and financial advantages.
Those moves have caused "the market to consolidate faster than expected," said financing expert John Flippen Jr. during a 2014 NACS Show educational session in Las Vegas.
Titled "Grow or Go?", the workshop carried great weight in light of the sometimes double-digit multiples buyers are paying currently. For retailers considering a sale, now could very well be the right time. And the panelists didn't mince words on the subject of just what it means to be "for sale."
"We're always for sale," said Larry Jackson Jr., managing director of GTG Business Resources, which owns and operates three Good To Go convenience stores outside of Baltimore. "If an offer comes in, we're going to review it," regardless of whether it was solicited.
In fact, Jackson is in the process of selling the small chain as his parents--who started the company--look to retire.
"We're pursuing a sale right now," he said.
Retailer Jack Kofdarali of J & T Management Co. agreed with the concept of always being for sale, but he tries to even that out with steady growth, as well.
"We build three to five stores a year, and we try to sell three to five a year," he said, noting that the strategy keeps the California chain of 21 convenience stores nimble and the stores fresh.
The important thing is to have a plan, he said. If you're going to grow, can you afford it? Will you be able to staff a larger business? On the other hand, if you're planning to sell, what's your exit strategy? Do you know what your company is worth? What will come next in your life?
"Buying one station or 10 stations, it's a very big purchase," said retailer Sajid Chaudry, who owns 30 Zip In c-stores in the Washington, D.C., area. "A mistake can be very costly. So it's very important that you seek professional advice to make sure you're taking all the correct steps."
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