Mergers and Acquisitions: Buying Is Harder than Selling
Most M&A professionals will tell you that buying a company is more difficult than selling one. Owners of companies are bombarded on an almost daily basis from all sorts of Buyers. These would-be Buyers, be they private equity firms or investment bankers working for a strategic Buyer, are little more than a commodity to the owner of company with $10 million or more in revenue. Buyers are a dime a dozen.
An added difficulty in buying a company is that Sellers fall into two basic camps: those who know they want to sell and those who don’t want to sell. Deals offered by those who know they want to sell are difficult deals for Buyers because a wise Seller has gone through the M&A process and has generated interest from multiple parties, thus putting her in the enviable position of having options.
Those who have no interest in selling are difficult deals because they aren’t looking to do a deal! They aren’t selling their business. Period.
And if the company has critical mass — that is to say, sizeable revenues or profits or a strong brand name — the owner is tired of receiving a constant barrage of phone calls, e-mails, and letters from Buyers of all shapes and sizes who all say the same thing: “We have money, we’re different, and we want to buy your company.”
Even worse, many of these so-called Buyers aren’t seriously looking to buy and instead are on fishing expeditions and have entrusted the cold-calling to the lowest-level executive they can find. Many times, the person making the phone call is fresh out of business school, which means he probably hasn’t yet learned any real-life business lessons.
Buyers, take note: Never say “We have money, we’re different, and we want to buy your company.” Everyone says that!
Another obstacle for Buyers looking for acquisitions is that targets are quite often the Buyers’ competitors. Understandably, the owners and executives of these companies are extremely reluctant to talk to a competitor, let alone give up sensitive information such as revenues, profits, customer data, sales compensation, and the like.