b'Brand equity:This factor is related toparticularly for contract foodservicehave a balance sheet that reflects a market position. A well-known and highlyoperators. A president of a regionalsuccessful business. While there are regarded caterer is likely to command acontract foodservice company told mecaterers out there that have little or no higher price for the exact same product thanthat the first thing they look at wheninvested or retained capital, that may be a lesser-known competitor. evaluating a potential caterer acquisitionanother red flag for the potential buyer.History of quality management:Ais how much of their revenue comesAccolades:Awards, favorable catering company that is so small that itfrom contract venues. Its also importantreviews and positive press coverage has only ever been managed by its ownersthat these contracts are assumable by aare also important, adding value to the is generally considered a mom-and-popnew owner. selling company.caterer. Theres nothing wrong with beingA favorable lease arrangement:a mom-and-pop caterer, but the odds ofSince many caterers lease rather thanStrategies for Maximizing Value being able to sell the company to an outsideown their office/commissary/warehouseHaving spent a great deal of time party for a substantial amount are slim. Forfacilities, the cost and duration of theworking with independent caterers, Ive any caterer interested in eventually selling,lease will be a consideration for alearned two related things:its important to reach a size that affords thepotential buyer. If the caterer also ownsFirst, many smaller catering hiring of professional managers. the facility from which the businesscompanies are operated as lifestyle A stable work force:The most valuableoperates, the lease would be subject tobusinesses, meaning they are operated assets of any catering company are itsnegotiation as part of the acquisition. by their owners specifically to maintain personnel, and continuity is key. Having lowWell-maintained equipment: a certain comfortable level of income. turnover is effectively an endorsement ofAn acquirer will not be impressed byTheres nothing wrong with operating the company by its internal customers. a rundown physical plant, unless thea lifestyle business, but they are often A strong business culture:Companiescompany is for sale at a very deephard to sell.that are operated as lifestyle businesses,discount. On the other side of the coin,Second, many caterers hate to pay structured more for tax avoidance than toa modern production facility can addcorporate income taxes, and therefore report a profit, are often a hard sell. value to any deal. avoid showing a profit. But without a Opportunity for improvedWell-documented historical salesprovable profit, the amount that may be profitability:Having a history of provableand financial information:The moregenerated by the sale of a business may profitability is key to having an attractivereporting that is available to the buyer,be minimal.offering for sale, particularly to unrelatedwith plenty of detailed back-up, theIf you are planning to sell your third parties. However, there is also a casemore likely it is the deal will go through.business at some point, you should start to be made that for some buyers, havingThe financial reports should also beplanning well in advance, with particular some runway for improved profitability isconsistent with industry standards andfocus on the following:important. should be easily analyzable.Ensure that your business shows Event venue contracts:VenueA strong balance sheet:Aa profit every year, over and above the exclusives are like money in the bank,company that is up for sale shouldamount that you as the owner take out in compensation. Make sure that your financial reporting is clean and easy to understand. Regularly test your operating metrics against industry standards to determine where you can improve. Minimize any gray area business expense deductions. These can be a red flag for potential buyers. For on-premise caterers, since the opportunities for repeat business are fewer than for off-premise caterers, keep up-to-date Pace Reports for sales bookings so you can show a buyer how you are doing compared to earlier periods.CATERING, FOODSERVICE & EVENTS cfe-news.com57'