Acquisition Mechanics And Psychology
The mechanics of buying a business vary different, depending on the specific type of business that you are buying. The owner manager culture of a small business is completely different from that of a large business as these two types of businesses operate in different ways. While a small business is keen about maintaining its legacy, brand, the existing culture of the business and protection of incumbent the staff, a large business is only interested with strategic and financial synergies. As such, large businesses will care less about retaining the legacy, brand, employees and other aspects if they happen not to follow within the line of their strategic objectives.
What drives big business?
Larger businesses are predominantly driven on profits, sales growth, cash flows and shareholders ROI. However, this is very different from owner-manager businesses where other factors that are largely neglected or ignored by larger businesses come into play such as business heritage, culture and the well being of staff. Such factors have an outstandingly big impact when it comes to negotiating cash free deals during the business acquisition process. Dealing with a lone owner manager, when you intend to acquire his or her business without spending any cash, can be simple, especially when you really know what you need to focus on during the negotiation.
What to look for in an owner manager
When it comes to a lone owner manager, you as a buyer can really benefit if you plan to acquire the business from an owner who has become frustrated with how the business is progressing. It may be the profitability of the business isn’t as high as it used to or the owner is becoming frustrated with continued loss of market share. The owner could also be getting older and their lowering energy is pushing them to sell the business and probably go into retirement. They, or a family member could be suffering from ill health. A change of focus is something else that you can play on especially where the owner is now interested in trying his or her hand in a completely different line of business.
Stay away from big business if you want a cash free deal
However, such things noted in a lone business owner are something that you won’t find in a large business. As such, acquiring a large business requires that you take on a completely different approach as the change on owner manager culture completely changes the entire game plan. For instance, large businesses don’t have issues such as lack of a succession plan, lowering of energy and will rarely change their business focus or get frustrated with new developments in their field. Keeping this in mind, one must understand that the owner manager culture plays a very crucial role in business acquisition.