Whether you’re planning to sell your pallet business in the near future or not, life can be unpredictable.
Things can change drastically in a moment’s notice without warning and you may find yourself needing to sell. That’s why we’re asking this important question: “If you had to sell right now, could you sell your pallet business?”
One of the biggest reasons that companies aren’t able to close the sale on their companies when they want to sell is that they aren’t able to provide the right information at the right time. When a large company with money wants to add your business to their list of acquisitions or an individual wants to buy you out, you need to be ready to pounce.
According to Inc. magazine, most sellers just don’t have the experience, know-how, or the ability to provide the kind of details that potential buyers want to know about their companies in a timely manner. So, what kind of things will a buyer of a pallet business likely want?
Chuck Lepinski, who was in the pallet business for 17 and a half years before selling his businesses in Minnesota, and starting new ventures, now runs several companies, including Associated Auction & Liquidation Company of Clarksburg, Tennessee.
“I started out as a pallet recycler on a shoestring and ran a big corporate type deal when I sold. All the companies I’ve owned started from that first recycling division, Lepinski Pallet Company,” he said. Around 20 years ago, Lepinski sold his recycling and new pallet businesses back to back and moved from Minnesota to Tennessee. He sold the pallet recycling company to Northern Pallet, and his new pallet division to Viking Pallet Corporation, both of which are still successful operations today, he said.
Not only does Lepinski have the experience of selling his own pallet businesses, but he also auctions and sells pallet businesses for others. Associated Auction handles the auction side of the sales, liquidating everything from entire businesses with property to assets and equipment only. He manages a separate land company that handles the real estate sales. “We probably do the majority of the pallet auctions in the industry,” he said.
“Sometimes we’ll advertise a company for sale in entirety for 90-120 days first.” Then he said if he can’t find a buyer, the business will go to auction.
With the industry moving more to larger corporate players, if pallet companies are not able to sell in a merger or acquisition these days, a lot of times the businesses will go to auction, he said.
Keep Good Records
When asked what key things business owners must do to prepare their businesses to sell, Lepinski recommended, “The biggest thing is to make sure your recordkeeping is straight. This includes safety records, tax accounting and maintenance records. Keep good records. That’s what’s going to sell a business.”
The most important thing a buyer will want to see is documentation showing that the business is profitable, or at the very least, has the potential to turn a profit. Serious buyers will also want to know who your top customers are and how much of your annual income is attributed to each. And they’ll want to see an up-to-date inventory list.
In addition, you’ll need to show them that you’re compliant with environmental laws and safety regulations, including OSHA safety standards.
Update Equipment
“Having updated equipment is also important, name brand, not shop-built,” Lepinski explained. “You want to have recognized name brand equipment.” This is important to buyers who want to make sure they’ll be able to find parts or service to keep the equipment running.
Buyers will also be interested in your computer equipment, networks and software, and whether they’re up-to-date, secure and efficient. They may also want to know if they can be integrated with other systems.
Clean and Organize
Another tip from pallet brokers is to clean your facility and make sure it’s organized before showing it to potential buyers. That’s because the state of the facility will make an impression, either positive or negative, and from that impression, assumptions will be made about the health of your business and whether buying it is a good choice.
When It’s Time to Sell
When it comes time to sell, Lepinski suggested that pallet business owners should put their accounts on notice so customers are aware that there might be a transition and aren’t caught off guard. Some companies are leery about doing this because they don’t want their customers to incorrectly assume that their businesses are having problems or struggling.
The next thing to do is hire a professional. “I think the best thing to do is to market through a private agency.” And he recommends working with someone like himself who understands the pallet industry because “selling pallet companies is a real niche.”
A lot of owners simply list through a local realtor, he said. “The problem is that they don’t have the knowledge of the industry, so the business just sits there on the MLS.” The other problem with listing through a real estate agent is that they typically only market locally.
“Advertising is how you’re going to get it sold,” Lepinski said. “If I have a large pallet company, I advertise in the Pallet Profile Weekly. People pay to get that and they’re the real deal players. We’ve seen the best results hands down nationally by advertising there. If I’m going to sell a pallet company, that’s where I’m going to find my buyers because that’s the way to directly connect to the pallet people.” It might be a sawmill guy looking to add a pallet business, or someone in the Amish community who’s looking for a pallet business going on the market, he said.
In addition to the Pallet Profile Weekly, Lepinski says he does mass mailings, and will also advertise in other trade publications as warranted.
“Anytime you want to sell anything—marketing, marketing, marketing,” he said. “Having it for sale is one thing, but marketing it is another.”
Editor’s Note: Contact Chuck Lepinski or Associated Auction & Liquidation Co. or LPS Equipment at 612-390-1844, email chuck@lps-inc.com or visit www.associatedauctioncompany.com/ or www.lps-inc.com/
