At Rental Acquisitions LLC, we are focused solely on the rental industry. Although we’ve been asked to represent and value other types of companies around the country, if it is not under the “ARA umbrella” then we refuse as we don’t want to lose our focus and/or dilute our services which are aimed, again, solely at the construction equipment and party/special event rental industry.
Your rental center should also focus on its core competencies. Going beyond some earlier posts where we advise to not lose focus on resale merchandise and other (seemingly) complementary offerings, it is our strong opinion (based on decades of combined rental industry experience) that the most financially sucessful rental companies focus on either the construction/contractor trade or the special event side of the business. Not both.
Simply stated: You should either be a party rental center or a contractor/equipment rental center, not a mixture of the two, to really have a top-shelf company. An exception is if you have both party and construction/homeowner equipment, then the two divisions should be COMPLETELY separated.
Separate facilities. Separate books and records. Separate employees (no sharing employees between the two divisions). Separate business name. Separate Logo. Separate Website. You get the idea.
Over the years, we’ve sold equipment and party rental divisions of companies whose owners realized how different party and construction equipment rental are. Generally, you’re either a party person or an equipment rental person. To say you are both is diluting your core competency. If you do offer both segments to the rental industry, make sure that not only are the businesses totally separate as mentioned above, but that you have that core competent manager running the side of the business that is not your core competency. Have a star party manager run your special event division if you are an equipment guy. Vice versa if you are a party person. Or, as we’ve seen over the past few years, divest yourself of the segment of your business that you don’t love and reinvest those proceeds in the division that you favor. Chances are you’ll perform better when solely focused. But know this, if the divisions aren’t totally separate, it’s nearly impossible to sell one division as an ongoing enterprise.
Exceptions to this rule are evident: For example, if you are in a small market (say under 30,000 population) with little to no competition, then being a general rental center that offers everything (including cribs, rollaway beds, audio visual, maybe even some medical equipment!) and shares everything from employees to brand name, etc. makes sense. Any buyer of this type of business will certainly be a local individual buyer, however, and it will be a difficult sale.
To be sure, it is very difficult to sell a rental company today that doesn’t focus solely on either equipment rental or party rental. Many construction equipment rental companies have a few tables and chairs, but that doesn’t make you a party rental company. Focus on your core competency and you’ll be in good company.