Create a regional powerhouse by purchasing multiple businesses in the same vicinity. This strategy can diversify and stabilize cashflow, thus increasing the value and multiple.

Picture your favorite stretch of interstate. Instead of purchasing one gas station, you purchase one gas station at 4 consecutive interstate exits. You create buying power by having 4 instead of 1. You increase your odds of getting people to stop at 1 of your 4 locations. You hire a manager so that you can be an absentee owner. The manager has an easier job as he/she can jump on the interstate and go up 1 exit to visit the next location. It is easier to justify a manager with 4 locations versus 1. The value added by having multiple locations can increase the multiple on the entity. Let's say that you purchase each location for 2-3 times cash flow. The stability of your combined locations and the savings from synergies created by multiple locations, can increase the multiple if you decide to exit the combined entity. Let's say you sell for 4-5 times cashflow.

Restaurants are the prime example of using a regional roll up strategy. Banks make many bad loans to fund restaurants. Picture yourself owning 10 fast food restaurants. 2 stores do extremely well, 6 do average, and 2 struggle. Once again, with a regional roll up strategy, you average out the ups and downs of the restaurant business. Roll up strategies can bring higher valuations, higher multiples. Think about this strategy when developing your game plan for business success.

If you are interested in pursuing a regional roll up strategy in Kentucky or Tennessee, you should give one of our business brokers a call or e-mail. They may have a particular strategy in mind.