For transportation business owners, strategically acquiring competitors can be an attractive way to develop a company. On the other hand, strategic acquisitions can be intimidating, especially for owners inexperienced in purchasing a company or when a bad experience in the past has predisposed an owner against acquisitions. Many opportunities for growing a business are missed because of fear or misunderstanding of the potential benefits of strategic acquisitions for both buyer and seller.
In order to help transportation business owners become more savvy at acquiring other companies, here are three recommendations to keep in mind:
Gain access. Be informed.
Effective business acquisitions are the product of possessing access to relevant information about the transportation industry and being educated about your business and that of your competitors. Updates on transportation businesses for sale can be found online and through several industry email lists. For example, The Tenney Group provides regular updates to business owners who have set up a “buyer profile” through the company’s website.
Being educated about your industry might sound like a no-brainer, and it should be. Unfortunately, many owners make decisions without a firm grasp of the dynamics of the market for businesses operating in their field. Furthermore, without knowing the actual value of your own business, a valuation of a potential acquisition will be of little use. As a buyer, knowing what leverage you have in negotiations is crucial to achieving a favorable result.
If you’re serious about buying a transportation company, you have to make offers.
Successful business developers know why it’s important to make offers to companies often, even if they know most of the offers won’t be accepted. After all, if a business looking for a strategic acquisition isn’t making offers, what are the chances of finding a business to acquire? Offers must be serious, as well. Many companies go through the motions of negotiations without ever being pressed to make a decision. Make an offer in writing, and insist on receiving a yes or no. Regularly making offers will quickly show which companies are serious about an acquisition and which are not.
Good deals shouldn’t be allowed to die young
Every business owner can think of a million reasons to pass up a great acquisition opportunity. Buyers often drop out early in the process, unaware of the potential benefits of a deal or wary of the initial sticker price of the company. Particularly when there is a gap between what the buyer and the seller consider to be the value of the company, buyers pass on a deal without having exhausted all of their options. Sellers are naturally suspicious of those offering to purchase their businesses and tend to see their companies as worth more than the price buyers evaluate them to be.
Finding the right seller of a transportation business is nearly as important as finding the right price. When buyer and seller instinctively realize the financial upside to completing an acquisition, a good deal has a much better chance of being finalized. Therefore, don’t let a good deal die young – it may turn out much better than expected.
A business broker in the transportation industry can help buyers and sellers alike overcome some of the institutional obstacles of completing a good strategic acquisition. In addition to providing a fair valuation for a transportation company, a broker can handle delicate emotional situations and find creative solutions to meet both buyers’ and sellers’ goals.