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Who will buy my business? What entrepreneurs really think

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Perhaps because of the megadeals and mergers that make the headlines – think Heinz and Kraft, or Dow Chemical acquiring DuPont – many business owners automatically assume that the most likely acquirer for their business will be a close competitor. This week’s announcement that Disney is to buy most of the assets of 21st Century Fox is a $52.4bn reminder of the strategy. It’s perhaps most eloquently expressed by the fact that Disney now owns the rights to all the Star Wars movies, as well as the X-Men, Alien, and Planet Of The Apes franchises.

A good move for Disney, then. But away from the billion-dollar deals, selling to a competitor still seems a logical step. Your competitors by definition sell similar products or services to a broadly similar customer profile. They know you, you know them, and the fit is obvious. For those in the market to buy a business, acquiring a direct competitor at a stroke strengthens market position, and takes another player out of the game. Makes perfect sense all round, doesn’t it?

Well, sort of. This week’s BCMS webinar explored 'How to be an attractive business to buyers'. I hosted the webinar, chairing a fascinating discussion between BCMS North America’s Bob Goldsmith and Ken Barragan of the BCMS Corporate Finance team, who both offered their expert perspectives about preparing a business for sale. They categorically agreed on one thing: that exploring a wide range of acquirers is essential, because it drives the best deal, and the best terms.

As Ken and Bob explain, look beyond your competitors, and you’ll uncover the complementary or ‘synergistic’ acquirers – those with a different business focus, but with some clear overlapping characteristics, and a strategic motivation to buy. Some recent BCMS deal completions show this principle in action: a wine merchant acquiring a luxury chocolatier, or the Vitec Group acquiring the UK developer of a wireless camera lens technology.

Those of you who have watched BCMS webinars will know we often run short surveys during the event, getting live results from attendees. This week’s results were intriguing, and perhaps indicated a shift in thinking amongst entrepreneurs. 53.4% did believe that a competitor was the most likely acquirer for their company. But 40% believed their buyer would be a complementary, non-competing organisation. Interestingly, the remaining 6.6% believed a private investor would acquire them – demonstrating a willingness among business owners to consider different deal types, too. In short: today’s business owners are thinking far and wide.

Another key finding came from our question on reason for sale. 70.7% of respondents want to sell to change their lifestyle or work/life balance, with a further 12% looking to sell to fund and pursue other business interests.  Not one person ticked the box marked ‘market conditions’ as their reason to sell up.

Which shows that even in these times of Brexit and economic uncertainty, selling a business is still an overwhelmingly personal decision.

The BCMS webinar 'How to be an attractive business to buyers' is now available to view on demand

 

Mark Bentley's picture
Posted dec 2017
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