As a buyer, everyone likes to get “a deal”. Finding a
bargain often means being at the right place at the right time,
whether intended or by fate. Finding a lucrative opportunity to
buy a business that is for sale because of an unexpected
catastrophic event requires a disciplined approach.
As a business buyer, you often need to use “creative” means to
position yourself to get the first, if not the only, shot at a
promising business acquisition candidate. You need to explore
as many ways as you can to find quality companies that are for
sale that can be bought with extraordinarily favorable purchase
terms. Pursuing acquisitions that surface due to unexpected
business events or catastrophic business owner life situations
can a “winwin” opportunity for both business buyers and
sellers.
Unexpected Personal and Business Events
Assuming you have clearly defined business purchase criteria and
have the purchase skills and financial resources to effectively
respond to an unexpected, short term disposition business
purchase opportunity, you may want to leverage common personal
and business events to your purchase advantage.
Although catastrophic events are relatively rare in business,
they are genuine realities and must be dealt with in a prompt
fashion by business owners to reduce further company value
deterioration or even potential liquidation.
Personal life events for business owners such as death, divorce,
indictment, sickness, disability or addiction to expensive
vices often significantly accelerates the need to recapitalize
or sell the business owner’s viable business.
Unexpected catastrophic business consequences, realized from
unexpected events or neglect, stupidity or devastating reactive
business tactics such as: large liability claims, loss of a
major customer(s), government seizures or new legislation,
employee fraud, strikes, lender financing changes or no viable
contingencies for acts of God, to name just a few, also
significantly accelerate the need to refinance or quickly
market the business for sale.
How Fast Do You Need To React?
Business buyers typically do not want to purchase a company that
has experienced a major unexpected setback or have to put
themselves through a quick “buying blitz” to qualify a rapidly
deteriorating acquisition candidate. However, high return on
investment purchase opportunities resulting from catastrophic
events, of viable businesses that are consistently profitable
with immediate, critical, financial or human resource
deprivation are often well worth the extraordinary effort.
To quickly restore a business to its established efficiency a
business buyer must act quickly to qualify and close the
business purchase. Often the business buyer who can react the
quickest in its purchase methodology or offer immediate
purchase funds will easily offset a higher purchase price
offering from another potential buyer.
For a business owner personal tragedy, a business buyer
typically has less than 60 days to buy the company before major
value deterioration occurs. For a wide variety of major
business catastrophes, a business buyer typically has slightly
more time, but not much more!
How Do I Find These “Deals”?
Effectively locating immediately distressed businesses that must
be recapitalized or sold because of unexpected personal
business owner situations or business management misfortunes
does not happen overnight. It requires a premeditated,
organized and ongoing program of communication and
documentation of your distressed business purchase interests to
legal, financial and business brokerage intermediaries who
typically must handle these extraordinary situations.
Reinforcing your unique interests and abilities to respond to
specific business catastrophe situations also requires periodic
oral and written communication to these same types of business
service providers.
Steps to “Get the Word Out”
* Define and document your distressed business purchase criteria
* Define business: legal, financial and acquisition service
providers who typically deal with distressed business
situations: M&A or Probate attorneys, Bank Trust Departments,
Commercial bank “workout” managers or “turn-around”
acquisition intermediaries: investment bankers, business
brokers, consultants or CPA’s
* Get the word out! Implement an organized effort to communicate
and document your specific catastrophic business purchase
criteria to all above noted service providers
* Periodically reinforce your distressed business purchase
interests and criteria with broadcast mailings, announcements
or advertisements
* Embellish your successful acquisitions of distressed
businesses with press releases and formal printed or
electronic announcements to like business service providers
Often the more “creative” you are to find deals, the quicker
you’ll find the “right” deal. The more diverse your means to
locate viable companies that are for sale, the better your
chances of finding a quality acquisition candidate that few
others are aware of.
As a business buyer, you have two ways to look at buying
businesses based on catastrophic events: 1) as negative, taking
advantage of distressed sellers, or, 2) as positive, taking
advantage of a unique opportunity to become a business
seller’s, “savior”, the best means available to allow their
employees to keep their jobs and continue to provide for their
families. You make the choice… like most lucrative business
opportunities, if you don’t participate, others more than
likely will!
About the Author:
Mark Smock is President of
, the
FIRST international business buyer directory of its kind.
Business Buyer Directory provides a non-traditional means for
proactive business buyers to locate businesses for sale
worldwide that meet their exact registered purchase criteria.
