Selling a video gaming terminal (VGT) business can be quite profitable but it also requires careful planning, strategic marketing, and understanding the unique aspects of the industry. Here’s a comprehensive guide to help you navigate this process.
Understanding the Market
Know Your Business Value
Before selling, assess the value of your VGT business. Consider factors like revenue, profit margins, discretionary earnings, and your market position. Engaging a professional appraiser can provide an accurate valuation and make your business more attractive to potential buyers.
Regulatory Compliance
Ensure your business complies with all relevant regulations. As Illinois VGT businesses are subject to strict licensing requirements, maintaining compliance can significantly affect the sale process. Make sure all licenses are current and that your business is in good standing with regulatory bodies like the Illinois Gaming Board (IGB) and local municipal government agencies. Additionally validating that your VGT business is current with all taxes, including sales taxes, can help avoid a common challenge.
Your Establishment’s IGB License
One of the most crucial aspects of selling your business is to guarantee the VGTs remain operational post-close. In order to ensure a smooth transition to the new owners, it is best to disclose the potential sale with the IGB before you close. The buyers should be disclosed on your establishment’s IGB application and fingerprinted before the sale is completed. Doing so allows IGB to perform the required background investigation on the new owners. If you are selling the assets of your business, it may be possible to keep the VGTs active post-close through the process spelled out in IGB Rule 590. It is advisable to have an attorney navigate this process for you.
Preparing Your Business for Sale
Financial Records
Maintain detailed and accurate financial records and get them organized before putting up your business for sale. Prospective buyers will scrutinize your financial statements, so having clear documentation of your revenue streams, expenses, and profits is crucial. This transparency can build trust and facilitate a smoother transaction.
Operational Efficiency
Streamline your operations to demonstrate efficiency and profitability. Show that your business can run smoothly without your direct involvement. This can include standardizing procedures and training or retraining staff to handle day-to-day operations independently.
As the first Terminal Operator to install VGTs in Illinois, Universal Gaming Group knows the industry inside and out. Please contact us with any questions you might have if you’re considering selling your gaming business.
Marketing Your VGT Business
Identify Potential Buyers
Identify and target potential buyers, such as existing location owners looking to expand, investors interested in the gaming industry, or entrepreneurs seeking new business opportunities. Tailoring your marketing efforts to these groups can increase your chances of a successful sale.
Professional Representation
Consider hiring a business broker with experience in the gaming industry. Brokers can help you find qualified buyers, negotiate terms, and navigate the complexities of the sale process. They can also provide valuable insights and advice based on their industry knowledge.
Highlight Unique Selling Points
Emphasize what sets your business apart. Whether it’s a prime location, a loyal customer base, or advanced gaming technology, highlighting these unique aspects can make your business more attractive to potential buyers.
The Sales Process
Initial Preparations
Start by gathering all necessary documents, including financial records, licenses, and maintenance logs. Prepare a detailed business summary that outlines your operations, market position, and growth potential. This summary will be a key tool in attracting and informing potential buyers.
Negotiations and Offers
Once you have interested buyers, be prepared to negotiate. Understand your minimum acceptable price and be clear about the terms you’re willing to accept. Flexibility can be advantageous, but ensure that any deal meets your financial and personal goals.
Due Diligence
Allow potential buyers to conduct due diligence. This process involves a thorough review of your business operations, financial records, and legal compliance. Be transparent and cooperative, as this can build trust and facilitate a smoother transaction.
Finalizing the Sale
Work with legal and financial advisors to finalize the sale. Ensure that all agreements are clearly documented and legally binding. Once the sale is complete, transition smoothly by providing necessary support to the new owner during the handover period.
Post-Sale Considerations
Non-Compete Agreements
Consider including a non-compete clause in the sale agreement. This can protect the buyer’s investment by preventing you from starting a similar business in the same market.
Future Involvement
Decide whether you want to stay involved in the business in some capacity, such as a consultant. This can provide additional income and ensure a smooth transition for the new owner.
Financial Planning
Plan your financial future post-sale. Work with a financial advisor to manage the proceeds from the sale and ensure long-term financial stability.
Conclusion
Selling a VGT business involves multiple steps and considerations, from valuation and preparation to marketing and finalizing the sale. By following these best practices and seeking professional guidance, you can maximize the value of your business and achieve a successful sale.
Universal Gaming Group helps our partners every step of the way–from starting a gaming business to selling your gaming business. Please contact us and let us know how we can help you reach your goals.
