Today, I’d like to share real-life stories about recent deals and where the buyers came from. Let’s start with competitors. Because of the risks involved, these types of buyers need to be approached cautiously.
A client of mine was a highly successful subcontractor in Reno who wanted significant market share in Carson City but was unable to obtain it. The reason was simple- my other client in Carson City.
The solution was obvious- bring the two together. The result was that both the seller in Carson City and the buyer in Reno got what they wanted.
To further illustrate this point, as part of the original deal, the seller signed a six-month employment contract with the buyer but is still happily there two years later.
Another type of buyer is the strategic acquirer. A recent client of mine was a construction contractor who wanted greater control of materials and the transportation of products he used.
To accomplish this, he bought a successful company already serving this market. The synergy that was created for the buyer helped foster results they were looking for.
Career-change buyers represent the largest group of buyers. Some are big. Some are small.
I’ve had clients who excelled in the hospitality industry but bought a local restaurant because they wanted to be their own boss. At the other end of the spectrum, I’ve had a lawyer who tired of the profession and bought a large construction company because he wanted a new challenge. Although they might not have a specific knowledge of the business they’re buying, these types of buyers bring a different skill set to the business, which really compliments what is already there.
If career changes are the largest group, employees who purchase companies are probably the smallest. Many owners would like to sell to an employee, but a problem that often arises is that the employee doesn’t have enough money to consummate the deal.
However, a deal brokered between the owner of a local retail business and an employee who could afford the transaction proved that it can work.
Regardless of what type of buyer is involved, there are common steps that need to be taken to ensure that there are no surprises. That is just not good business.