Partner Tim Malott in Times of San Diego
Check out this great article on how the ideal buyer for your business is usually not on your radar screen.
By Tim Malott
As an investment banker, I sometimes get brought into a situation where business owners have already identified a buyer for their company. In their minds, my role is to come in, negotiate the terms, coordinate the due diligence and get the deal closed.
The big problem in these circumstances is that the sellers more than likely left money on the table. That’s because they almost certainly looked only at organizations within or related to their industry. This limits opportunities. In the more than 20 years that I’ve been contracted to seek out and negotiate the sale of companies, I’ve never closed a deal where the buyer was on my client’s radar screen.
The reality is when a competitor acquires you, it’s typically not a strategic purchase. They’re simply increasing market share. I strongly encourage business owners to look more broadly. A better question to ask is what companies could benefit from owning the organization’s products, services, technology or customer base. While not the typical way mergers and acquisitions advisers look at getting deals done, this line of thinking is more accretive; in other words, incrementally beneficial to the transaction’s economic value.
