Whether you are a corporate or individual buyer, one of your first questions in the process is related to the business’ industry. Which industry is best?
Let me tell it to you straight – no industry is the best industry. And I’m not just saying that so I don’t hurt any of the industries’ feelings. You may have preferences and some industries may be better than others but, speaking from experience, there is not a golden ticket industry that will take you to the chocolate factory of ideal businesses.
There isn’t a perfect industry for your business acquisition. So, during your search, don’t focus too narrowly on one industry. Here’s why:
1.You can’t afford it
The business acquisition process isn’t cheap. It is incredibly valuable but it isn’t cheap. Anything you do that hinders the process from working as effectively and efficiently as it can leads to a poor use of your resources. It may feel logical that the narrower the parameters the more effective the search. But because you are hindering deal flow it will likely just make the process longer. The longer the process the more money you’re spending. As you begin your search process, you simply can’t afford to be picky.
2. You’re better than that
Don’t sell yourself short. I’ve found that some people put narrow industry parameters around their search because they’re afraid of an industry they don’t know. Don’t let fear control your decisions. You can learn how to operate in a different market than you’re accustomed to. It will be hard but you can do it.
For example, we had a corporate client that was the best player in an industry that was becoming obsolete. They had lapped the competition and nobody in their space was worth acquiring. We sourced a few great companies they could have acquired to complement their services well. But because these companies were off the beaten path we couldn’t get the executive team to get on board. This corporation wanted to grow through acquisition. They had the capital to get a deal done. But they didn’t have the confidence or imagination to go a little further afield and pick something up that was a bit disruptive.
3. You’ll get there eventually
The business acquisition process is less scientific than most make it out to be. There isn’t an equation for the perfect match. When you get too narrow with your industry too quickly you leave out opportunities that could be a fit in every other way. Casting a wider net allows you to see more options and thus, gain a better understanding of what is truly a fit for you. The best industry will come to light as you walk through the process. Be patient. Be discerning. You’ll get there eventually.
The industry parameters you have are part of a larger investment thesis for your business acquisition. Every aspect of that thesis is important in different ways. I welcome the opportunity to talk to you about this process. Please reach out here.