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Synergistic Acquisition: What You Need to Know about Optimal Buyers

By Generational Equity

optimal buyers

The sub-title of the press release said it all:

“Purchase Complements Company’s Portfolio of In-home Covers with Outdoor Product Line”

The operative word above is “complement.” If you look the word complement up in the dictionary, it means:

Something that completes or makes perfect: A good wine is a complement to a good meal.

The quantity or amount that completes anything: We now have a full complement of packers.

Either of two parts or things needed to complete the whole; counterpart

I took the liberty of bolding the last definition because I believe in the realm of M&A activity and buyer motivations, it sums up what a complementary acquisition is. In a win-win scenario a buyer will find a seller that creates a new entity comprised of the best of both prior companies. This is what synergies are really all about.

In the transaction I am referring to, a portfolio company of Guardian Capital Partners (GCP), Sure Fit, acquired a company named Patio Armor. Patio Armor offers covers for patio furniture, barbecue grills, and other outdoor products. Sure Fit is a provider of slipcovers and home solutions and has been owned by GCP since a buyout in December 2009.

Complementary and Synergistic are Synonymous

If you visit their respective websites you will see why this deal is truly “complementary.” Sure Fit primarily manufactures slipcovers for indoor furniture. Patio Armor does the same but only for exterior furniture. So in one transaction, Guardian Capital Partners has combined two entities into one with a perfectly synergistic product and market fit. This is how Hugh Rovit, CEO of Sure Fit described it:

"The Patio Armor brand will immediately strengthen our portfolio of solution-oriented covering products for the home. This acquisition is an excellent fit with our stated growth strategy to expand our category leadership position through both organic means as well as synergistic, bolt-on acquisitions that (a) expand our product line with complementary brands and categories, (b) increase and extend our market penetration and (c) provide for sourcing, operational and distribution synergies."

Note the three areas emphasized in their acquisition plans – product line expansion, increased market penetration, and new sourcing/distribution opportunities. Normally if you can obtain one of these in an acquisition you will be happy. In this case it was a home run as the new entity will expand Sure Fit into new products and markets and provide new sources of goods.

These are synergies that many acquirers can only dream about. It would be a safe bet to assume that Guardian Capital Partners looked at hundreds of acquisition targets before settling on Patio Armor. And they must literally have been salivating as they went through due diligence and realized the extensive synergies that they would be able to obtain through this acquisition.

Your Company Could be “Complementary”

The key takeaway here for you if you are considering the sale of your company is this: Realize that in order to get optimal offers for your firm, you will need to clearly understand what motivates individual buyers – what they are looking for – and how your company can match those needs. This is not easy to do. But Generational Equity has written a whitepaper on the subject of buyer motivations and synergies. If you would like to learn more, please click here.

Another issue to consider is this: Many of you don’t have faith that there are buyers out there interested in your business. You simply don’t realize how the “off-balance sheet” assets that you have can be leveraged to create a win-win scenario for you with the right buyer.

If you would like to learn more, I would invite you to attend one of our free M&A workshops. While there you will be able to explore in depth about why your company might be a good acquisition target and the steps you will need to take to ensure you close an optimal deal when you sell. 

And remember, there are hundreds and hundreds of buyers out there just like Guardian and Sure Fit. You just might be surprised who might be interested in your company.

© 2011 Generational Equity, LLC All Rights Reserved

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