As a proactive business buyer, whether a one-time buyer or
someone who acquires companies on an ongoing basis, you must
define and pursue various creative means to locate unique
companies that potentially offer you extraordinary acquisition
potential, whether they’re “officially” for sale or not.
There is a proven adage in the sales profession that directly
relates to business buyers pursuing quality companies to buy,
“All the good salespeople are employed! The fact of the matter
is, the best acquisition candidates are officially NOT for
sale. It is not that they cannot be bought; it is just that the
business owners have not made a conscious decision or reached a
compelling level of justification to sell, nor have they
applied any company resources to put their business on the
market. Again, as in selling, sometimes all you have to do is
ask!
Should I Look for a “Deal” or an “Opportunity”?
Most seasoned business buyers will tell you that they are not
always looking for “a deal” in a business acquisition, but to
purchase a company for reasonable purchase terms that offers a
consistent, high return on investment, with little or no buyer
competition (Notice that the term, “purchase terms” was used
here, not “purchase price”.) To a professional business buyer,
purchase price is important, but more often than not, the terms
and conditions of a business purchase are most significant.
Astute business buyers focus on leveraging their investment
dollars first and foremost, seeking to acquire controlling
interest in a viable company for the least amount of their own
money. Business purchase terms typically make or break the
deal.
Understanding that the best acquisition opportunities are among
companies not officially for sale, knowing that finding a
business to buy that has solid return on investment potential
and can potentially be bought with favorable purchase terms
makes the most sense to a business buyer, it is now prudent to
focus on developing a unique means to find like companies to
buy.
“Product Conversions” = Great Acquisition Candidates
Business buyers should take a magnified look at how manufactured
product improvements can and will equate to definition of
extraordinary acquisition candidates. Products and services
advance and improve as new technology is applied to them.
Companies applying new technologies represent outstanding
acquisition opportunities.
The focus here will be on the systematic definition of
applications of new technologies for only manufactured
products. However, understand that services, be they consumer
or commercial oriented, are directly, positively, affected by
advancement and improvement of manufactured products used in
the service provided.
Manufactured products can be improved in two fundamental ways,
with product content and/or with manufacturing processes. To
clearly understand how this can lead to finding acquisition
candidates, a business buyer needs to take a closer look at
these product improvement fundamentals:
Fundamental Manufactured Product CONTENT Advancements:
Product Application Improvements:
Function, speed, durability, taste, smell, simplicity, strength,
noise level
Product Sensual Improvements:
Finish, color, clarity, texture, seamlessness, design, packaging
Product Ease of Use Improvements: Multi-uses, storage,
temperature range, safety, ease of transportation
Companies that are on the cutting edge of converting their
products with advances in product content and related design
improvements, such as: metals to polymers, polymers to
composites, and organics to synthetics represent outstanding
acquisition candidates.
Fundamental Manufactured Product PROCESS Advancements:
Product manufacturing throughput improvements
Product manufacturing cost reductions
Product quality control improvements
Product assembly simplicity
Product packaging improvements and advantages
Product material waste reduction
Companies that apply the latest advancements in manufacturing
processes, making new products that exemplify state-of-the-art
“product conversions “by adding product value for the same cost
or significantly reducing manufacturing costs represent
extraordinary acquisition candidates.
A business buyer should clearly understand the evolution and
status of a product conversion in a macro market trend
perspective and where or how a potential acquisition candidate
obtained the technology before pursuing the company. If and how
the company protects the technology is also paramount to their
future growth potential and perceived enterprise value.
Additional Opportunities May Not Be Obvious, But They’re There!
Once a new product conversion is discovered or introduced to the
targeted market there can be extraordinary, synergistic
business opportunities for an existing business owner or
potential business buyer if they immediately apply and protect
these same product material or manufacturing process
advancements to their existing or planned product offerings.
This is especially true for products in different industries
and in other geographic markets.
What you have just read is potentially a major “enlightenment”
if you are a strategic business buyer. Looking at companies to
purchase from a product conversion prospective can
differentiate you or your firm from most other business buyers.
Being the “first” business buyer to see the potential of a
product conversion at a specific acquisition candidate can
potentially mean you are the ONLY pursuer of that company,
effectively, uniquely, positioning you or your firm to acquire
an outstanding company with excellent growth and ROI potential
with little or no purchase competition.
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.
