• 900 Egan Way CT., Burleson Texas 76028

  • Should I consider selling my Pawn Business?

    Should I consider selling my Pawn Business?

    I find myself answering that question a lot these days and I would like to take this opportunity to share a few thoughts on the subject matter since it seems to be in the air quite a bit.

    As some of you may be aware of, I have spent a lifetime in this industry and have done a fair amount of acquisition activities over these past few decades. To date I have successfully bought and sold over 200+ pawn shops in transactions totaling more than 80 Million dollars. Over these past years I have presented a number of seminars relating to this subject as well and have written numerous articles on this topic and provide a wide range of valuation services and more.

    There is a saying in the business world today and that is “windows open and windows close”. In relation to this topic no truer words could be said today.

    For a historical rendition on what has happened, stay tuned for our upcoming book that will place some spin on what has transpired over the past few decades since public money has arrived and more.

    For our purposes here and now I would like to add the following commentary for your considerations.

    Where am I at today and what options do I have?

    People may come to this crossroad in their professional careers for many reasons. Those could be that there are no successors to take the business on, there could be partnership dissolution issues, estate or trust issues, capitalization constraints, over-competed against, death or just plain ready to move on.

    We all may reach a point in time in our lives where we may just want to cash-out and move along and that is perfectly OK. After all, we are not taking any of this stuff with us right?

    Whatever the reasons may be this is not an undertaking that should be dealt with lightheartedly or without major considerations on all the moving components of doing something like this.

    A little bit of history for your consideration

    In the early 1980’s several significant events happened in this industry. For starters there were 3 IPO’s or Initial Public Offerings offered up to investors in the US in the Pawn Sector. These events were first headed up by Cash America International followed up by First Cash and EZCorp all of which are based out of Texas.

    Unlike any other event that has happened in our industry, this was one of the single largest changing moments in the history of our industry.

    40 years ago who would have ever thought a major US Publicly traded Pawn Shop Company would be traded on the NY stock exchange and have a market cap exceeding 1.5 Billion Dollars and operates more than a thousand stores on multiple continents?

    Today these 3 companies have combined market cap values exceeding 3.5 Billion dollars and climbing. The events of these public offerings were the largest industry changing moves in our industry’s 3000+ year existence.

    We used to say “When are the banks going to get into the Pawn Biz”, well if you look at the litany of institutional stockholders in any of these companies you will see almost all of the stocks are controlled by bankers and investment bankers. The banks are in our business today in a big way.


    When you invest money in a share of stock, what would like for it to do? The obvious answer is you want this investment to grow. In the case of the 3 publicly traded pawn companies the stocks have done very well in the past few years and the trend seemingly continues on.

    These companies were also perplexed like many of us have been in the past on how to grow their companies. In their cases they had the luxury of lot’s of public capital (money they don’t have to pay back) along with sizeable lines of credit and clear objectivity on growing as rapidly and as quickly as they could.

    In about 1988 the first major US consolidation race began in this country. Between 88 and about 1995 more than 700+ stores were acquired in transactions that totaled more than ½ of a billion dollars in cash, debt and equity.

    For the first time in thousands of years our businesses were suddenly having valuation principles applied to them and for those that were smart enough to get out early on, many of them cashed out with significant returns on their businesses and their livelihoods.

    Unfortunately this initial consolidation race was relatively short lived. Many of these companies acquired lots of stores and in some cases had extraordinary amounts of goodwill on their balance sheets and as such were seen as poor performers overall by many in the investment banking side of the community until they fully understood exactly what took place.

    For the same, as these companies began to mature and define their purposes, power, prestige and ability they also began to diversify their financial services. All of the US based public pawn companies heavily vested in the Payday sector and in some cases the auto title lending business and other forms of financial services as well.

    We saw dramatic growth of these companies in all of these other financial arenas and as a result they slowed down on their core business growth and operations which was always the pawn biz.

    This in effect was the initial collapse of the acquisition windows in the USA for quite sometime. With their new interest in these other financial products a lot of focus was removed from their core business and subsequently the growth slowed down considerably on the pawn side for several of these companies.

    Today, there is a lot of pressure being applied to these other types of consumer financial transactions in these operations from all over the US including Washington DC. Many believe that Payday loans and more are truly a dying breed of financial products and may have over shot its true lifespan is the prediction from some of those in the financial communities.

    Commodity Pricing – Opportunity?

    The price of gold has increased over 440% in the last ten years, can this trend continue?

    In the last 5 or 6 years with this nice spike in the value of gold and silver coupled with massive economic downturns on a global basis has sparked a renewed interest once again with rapid expansions and or acquisitions of pawn shops by all of the major players and a number of new well financed newbie’s coming into the sector.

    Once again we are seeing reasonable valuation principles being applied to well targeted acquisition candidates by all these entities. Today there is a nice appetite to seek, expand and grow these companies thru targeted store openings and smart acquisition deals that work for everybody.

    These power house companies also have the privilege of lots of cash, cheap capital and a host of financial options at their disposal to achieve the goals of continuous growth.

    Having more than one potential buyer that is competing to get into a specific market should spell opportunity for anyone considering going down this path.

    Lately there has been more focus by the key players to expand their operations not only in the USA but outside the country as well. After all, there are tens of thousands of stores and opportunities all over the world just like Wal-Mart and McDonalds has proven for decades. Same trends are occurring for this industry as present.

    Once again we are seeing a rising demand for quality pawn shop opportunities to be acquired.

    Acquisitions Running HOT

    Since the major entities that are here now have been involved in the consolidation race and have been at this for quite sometime, many of the most prominent multi-store operations have been acquired over the past few decades and clusters of stores or multi-unit operations have become far less available as a result.

    Many of the prime acquisitions and some of the best markets in the US and in other countries are slowly one by one being acquired and consolidated.

    For those of you that may have a well run operation either in a single store format or in some form of a multi-store format in desirable markets, you once again have an opportunity for your consideration if you were considering selling your business enterprise.

    This can be a slippery slope unless you really have a good plan in action, know what your expectations are and how to properly instigate them when you are ready to pull the trigger so to speak.

    There are many factors to consider when you go thru this process and some of those would be as follows:

    • what is the value of my business
    • what steps do I need to consider before going down this path
    • how do I protect my business and my confidential information
    • how do I properly go about presenting my deal
    • can I do anything to enhance my value assumption
      • operational changes that could enhance the value of the business
      • loan and inventory maximizing techniques
      • good financial house cleaning techniques
      • presentation of good systems and or controls
      • presentment of the operational staff and or owner/operators and their skill sets
      • presentment of my market penetration, goodwill gestures, operational history
    • what options could I present to maximize my potential deal
      • non-compete agreements
      • management contracts
      • stock options
      • debt assumptions
      • long-term note options
      • lease enhancements when and where buildings are owned
      • offsetting the goodwill or tax implications resulting from a potential deal
      • how and where to park the money’s if a deal is done
      • life after the deal

    These are but just a few of the in and out’s so to speak of traveling down this road. In the end the reality is as follows:

    • Gold and metals in general have been on a long continuous up tick and run, is this sustainable?
    • The US economy is sluggish at best and appears to be making a very slow economic recovery if it exists at all
    • The Global economy is in limbo as a result of the US market instability financially
    • Tremendous pressures are being applied by the FED and the Federal Reserve to truly destroy our way of lives thru over spending, massive debt build ups, huge government size increases, more forced regulations and the list goes on
    • Our way of life in this country and the world is under extreme peril and jeopardy
    • Quality pawn shop acquisitions candidates are fewer and farther between
    • Public companies are struggling with their deteriorating alternative financial products they offer
    • Huge cash infusions are being made into this sector by the financial communities in and around the publicly traded companies
    • Public company valuations are running at historical all time highs currently
    • Public perception is that industry is good and could weather out a strong economic downturn if managed correctly
    • Large demand for store opportunities is currently being sought by all of the major players in the USA and more

    In short, the windows of opportunity are once again open and demand is running high.

    Opportunities come and they GO

    We at the Pawn Shop Consulting Group pride ourselves in not only maintaining quality relationships with the major acquiring companies, but quality long-term relationships with our hundreds of clients all over the world today and back this up with hundreds of successful transactions in our sector.

    If you would like to “consider” what your options could be, why don’t you give us a call today and discuss your options and opportunities. We would be glad to assist you in this world of turmoil, help bring some clear and concise information to you about your options and provide complete turn key assistance programs if you decide to head down this road.

    We represent our clients with integrity and know how to present and speak the language of what the “big boys” want and what they are doing.

    Remember, you only get to sell your business once you might as well make the best go at it to insure you are maximizing your opportunity today!

    There is only ONE Pawn Shop Consulting Group and we ARE THE choice for professional pawn related services.


    Jerry Whitehead

    Pawn Shop Consulting Group, Inc.







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