Finding a good business to purchase is tough, even in good times. Although at first it seems like there are plenty of choices. Perhaps you are looking for a food distribution business. You look at the all the usual internet sites (bizbuysell, bizquest, mergernetwork.com) and you bounce around on some M&A firm’s websites. There seems like there are some good choices but after a few phone calls, signing some confidentially agreements and taking a closer look, you realize your options are pretty limited.
Heck, if you read my recent post, Jimmy’s Wild Ride, you know that some listings don’t even seem to be real listings. (By the way, Jimmy has yet to find that $85 million food distribution company that was listed). If you are serious, and are willing to spend some effort and money, you can do a custom search to find what you are looking for.
I’ll start off describing how to acquire a larger national business (M&A level) in this post. In my next post I’ll describe how to find a small, regional business (business broker level).
Medium Size Businesses (M&A level)
Marketing is the key. Because of the extensive marketing process, this isn’t something you want to do yourself so you’ll need to hire a firm like us (www.woodbridgegrp.com). In fact, I don’t know of other firms that use this process, so it is hard to write this without it seeming like a plug for our firm, so I apologize in advance for that. It’s a plug.
The first step is to prepare a marketing package on you or your firm. A simple profile isn’t enough; it has to be informative and professional with some “flash”. You want the business to immediately get the feeling you or your firm has the ability to both acquire and operate the company. It is a common mistake for both individuals and corporations to fail to market themselves appropriately to a seller (hey, you can even get better pricing and/or terms if you market yourself well).
The next step is to get in front of as many qualified businesses as you can using as many sources as you can that matches your criteria. We’ve found success with a blend of traditional and hi-tech: first class mailings and follow up calls as well as web site listings. Niche market journals and associations are used, as well as emails to companies already registered in our database.
Business owners get inundated with letters and calls from M&A firms, some which claim that, “We have a buyer for your business”. I remember getting my first letter like that 20 years ago when I owned and operated my technology company. I fell for it too and called, but quickly learned there wasn’t a buyer and I never answered another letter like it. So the letter we send is not that letter and whatever you do, don’t send that letter.
The process gets results and you will be presented with a list of targets that are willing to meet and start discussions…without the competitive environment of a typical selling situation.