I sit in many meetings with clients, potential clients and their advisers where everyone moots who might buy their business and where they might come from.
True, you should always look at which buyers would make the best fit and go for the low-hanging fruit first. However, it would be a mistake to close your mind to the fact that your buyer may well come from a direction you, me, or your advisers could never have predicted.
For example, I have just completed the sale of a manufacturer of steel industrial partitioning and safety products.
When we first sat down to discuss our exit strategy, I’d researched the M&A deals that had been done in this sector over the past 5 years and this exercise provided a few likely targets to approach directly. With the client, I then compiled a list of likely synergistic businesses: other partitioning manufacturers, interior fit out companies, mezzanine floors manufacturers, etc., etc.
Then, there was the myriad of investment companies and private investors from our database and networks to talk to but never, not in a million years, could we have predicted that this business would ultimately be sold to a chicken farmer.
I took a call from a family member of a farming business and he explained they were looking to diversify and intended to make 3 or 4 acquisitions completely unrelated to their core business, which they had decided was invested up to the maximum they felt comfortable with (I’m tempted to say they didn’t want all their eggs in one basket).
I persuaded them that it would be much more cost-efficient in both management time and professional fees to invest in one good, but larger, business.
They took this on board and my clients felt very comfortable with the buyers’ family business ethic and, with funding in place, the offer was accepted. So, after 13 months, well over a hundred enquiries and four offers, the deal was completed last week.
Now, who could’ve predicted that?