What the ice cream van man can tell you about M&A
The holidays are in full swing, and the ice cream vans are out in force. That tinny “Greensleeves” theme is one of the most distinctive sounds of summer, an instant call-to-arms to rush out, stop him, and buy one.
The ice cream van business (in the UK at least) is what you would call a seasonal trade; totally at the mercy of the weather and the calendar. What does he do in winter? And what on earth does this have to do with M&A?
Business is business, and the basic commercial principles that apply here apply to any company. What makes a business strong – and attractive to an acquirer – is remarkably similar, whatever the sector. It may sound flippant, but examining the ice cream man’s business model can tell us about business growth, and illuminate the multiple reasons acquirers are motivated to buy.
Let me explain: to get dependable, year-round incomes, the ice cream van man needs other products to cross-sell to his existing customer base. In winter, you’re likely to find him diversifying his product range: hot dogs, burgers, other convenience food.
Instead of driving the sunny streets, he probably targets high-density events with a captive customer base, from football matches to firework displays to pubs at closing time.
This is sensible market development. The business model is the same (selling fast food from mobile premises) the customer base is similar (the general public ‘out and about’).
The entrepreneurs among you are already thinking bigger: what else could you do to maximise your relevance as a business all year round? That’s back to diversification, and market development: Christmas trees in December, Easter Eggs at Easter, buy more vans, move into new territories…
And when it comes to selling, who is the most likely buyer of this business?
You might at first assume a local competitor is the best bet. But in BCMS’ experience really motivated acquirers – the ones who will pay for the opportunity - will see something more. Acquirers are looking for strong specialist product range, and a wide range of services. They like to see strong market presence and multiple revenue streams. They like to see a captive or loyal customer base, who know your brand (there’s “Greensleeves” again!) and come back time and again. They like to see routes to market, maybe ones they don’t already have.
Finding the right acquirer is about thinking laterally. And applying the ice cream principle to your business is a good place to start.