Mergers and Acquisitions in the Global World of Self-Storage

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Pros and Cons of Selling

In today’s current financial market, funding is more difficult and costly to acquire due to the financial crisis in the sub-prime markets. However, external financing for self-storage is essential to grow the business. Smaller companies with weaker balance sheets are having difficulty in arranging growth capital. Their alternative is to sell to a larger buyer.

The market for self-storage is maturing as increasingly more entrepreneurs enter the market. M&A generate economies of scale as more opportunities and companies become available. Overhead costs, such as expenses for information and security systems or upgrades to structures, can be allocated over more self-storage units.

Owners who sell their businesses to a larger corporation become part of the organization with resources, funds and time to organize operations more professionally. This is an advantage for the seller.

However, the disadvantage is the storage owner loses autonomy. There will be less freedom to make decisions on the fly, and following corporate policies and adhering to corporate reporting will be part of the monthly routine

A storage owner should plan the sale of his company well in advance, and use a business broker to assist in the process. This lets him concentrate on maintaining the facility’s profitability while the external advisor focuses on the transition of the business.

It is widely believed the industry will become more efficient as more mergers and acquisitions occur. This leads to better services at lower cost to the consumer. Economies of scale, the sharing of software and systems and financing opportunities are just a handful of the advantages to selling your facility to a larger company. The factors in turn will lead to the improvement and maturation of the industry.

Govert Derks is managing director of Corporate Finance in Europe, a mergers and acquisitions and corporate finance specialist focusing on projects in the records-management and self-storage industries. The company has an enterprise value between €2 million and €50 million. For more information, visit www.corporatefinanceineurope.eu.

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