Have You Considered Buying Your Competitors To Grow?
Forward thinking business Owners are doing 'roll-ups'. Growing by acquisition, buying up the local competition or complementary companies.
They know the trend is for larger Buyers to acquire profitable, more substantial companies. So it makes sense to give them what they're looking for.
If you do the roll-up and integration into your company for them, the Buyer can come along a little later and acquire the whole package. No muss no fuss. You get to offer Buyers a much larger and more desirable company to purchase. Making your exit easier and more profitable for you. Selling a company under $10 million in annual sales will likely get you 3-4 x EBITDA. Over $10 million and you could realize 6+ x EBITDA.
You know your competition and already have a relationship with them. In many cases they're in the same age range as you and also have a requirement for an exit strategy.
It's like starting out with a bunch of great baseball cards, part of a set. You go out to your friends and accumulate the rest and create a complete set. Then you sell the whole thing to a collector. The sum of the parts is more valuable than the individual pieces.
In addition there may be savings from integrating companies by cutting out duplication of effort and increasing purchasing power, broader or deeper distribution, combined sales and marketing efforts, increased staff use and efficiency etc.
Do not try this on your own. In order to do it right, you will most definitely need help with the whole acquisition, integration and growing part of the plan.
Exercise - You will need to make several lists to get started.
1. Competitors you think could be a good fit for your company.
2. Help you will require both internally and externally post integration. Operations, Finance, Sales, Marketing, Human Resources and Capital.
3. Acquisition specialists to identify and facilitate a purchase.
4. Specialists in integration of acquisitions into your current company. Could be a mix of internal (existing and new hire) and external resources.
5. Business growth specialists. Could be a mix of internal (existing and new hire) and external resources.
6. Legal for acquisition and employment law.
7. Financial for raising capital.
8. Savings you might enjoy from integrating companies by: (Your staff can assist here.)
8.1 Cutting out duplication of effort.
8.2 Increasing purchasing power.
8.3 Broader or deeper distribution.
8.4 Combined sales and marketing efforts/spending.
8.5 Increased staff use and efficiency etc.
Cheers, Eric
Eric Gilboord, CEO
