One of the common issues raised by business owners we meet with is this: “Why should I hire Generational Equity to represent my company rather than my cousin Larry who specializes in selling businesses in my industry?”
Our reply is always the same: Use your cousin Larry if you want him to approach the same list of buyers that he does with every client he works with. Hire us if you want us to access our proprietary buyer database of more than 34,000, companies across all industries that may be interested in your business.
This question is based on an erroneous belief that most business owners suffer from. They assume that the only buyer for their business will be another company in the same industry or, in some cases, their direct competitor across the street.
Now, in the end, your competitor may be your optimal buyer. However, if you start with that assumption, you will be eliminating the possibility that other companies in completely unrelated industries may find your business attractive.
Here is an important point regarding sourcing buyers from BCG’s 2017 M&A report:
Approximately 70% of all tech deals in 2016—9 percentage points more than in 2012—involved buyers from outside the tech sector.
OK, some of you will say, “But I am not in the tech sector. My business is brick and mortar and not sexy at all.” That may be true from your perspective, but you need to think like a buyer. Buyers look for intangible assets, items not on your balance sheet but features that when combined with their own create the proverbial 2+2 = 8 scenario.
The trend in cross-industry transactions was confirmed by Bloomberg recently:
One of 2017's big deal trends was the blurring of industry lines. Retailers are buying software and online outposts, wireless providers are looking to own content, and Amazon.com Inc., the king of e-commerce, scooped up a brick-and-mortar food retailer, Whole Foods Market.
For further proof, here is a partial list of cross-industry transactions in the news recently, according to Bloomberg:
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U.S. companies are increasingly making acquisitions outside their wheelhouses. Here are some examples from 2017:
The list above provides solid evidence of the popularity of cross-industry investing and some of them are quite compelling. For example, Whirlpool acquiring a personalized recipe company? Williams-Sonoma and 3-D imaging? Delphi and a self-driving startup?
Each of these was a strategic decision to invest in an industry that is complementary to the primary business of the acquiring firm. But you can bet that the dealmakers involved played a key role in using their cross-industry experience to find the optimal synergistic buyer for their clients.
The Bloomberg article also makes a really good point about future deal-making:
Convergence among industries continues to be a running theme for both large and small transactions. That means analysts and bankers who specialize in once-distinct areas of focus may need to bone up on other sectors.
This point above brings us back to the answer to the original question: The strength of Generational Equity is that we focus our attention on doing deals across industries every day. No need for our professionals to “bone up on other sectors” – we have been doing so for years!
Having access to a diverse group of tens of thousands of buyers that have given us explicit feedback regarding what they are after across all industries is a huge benefit that we bring to our clients that boutique, industry specialized M&A firms cannot provide.
Don’t just take my word for it, take a look at the success we have had across a wide range of industries with buyers from all sorts of sectors:
And have a listen to a few of our clients who are really glad that we have relationships with thousands of buyers across all industries:
Hopefully by now you have a better understanding of the reality that the optimal buyer for your firm may be in an industry you wouldn’t even consider on your radar screen. And, that hiring a firm like Generational Equity will expose you to a much broader buyer base than using your cousin Larry (or any single industry focused M&A firm) who will simply use the same list of buyers that they do on every engagement.
Interested in learning more about how our dealmakers can benefit you and your firm? Then give us a call at 972-232-1121 or visit our website, provide us with your contact information, and we will be in touch.
If you believe that you are not ready today to exit, we also hold highly educational exit planning conferences throughout North America that are designed to help you learn as much as you can about how to eventually find an optimal buyer for your business. Even if you never hire us to represent you, attending one of our conferences can be incredibly helpful to you in the future. Here is what a few attendees of our conferences have said about the benefits of attending:
Here’s the long and the short of it: Even if you are not ready to exit today, what you learn at our conference will prepare you for the process of exiting. Whether your terminus is one year out or ten, preparation is key and knowledge that buyers outside of your industry may find your business attractive is critical to your exit planning success.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2018 Generational Equity, LLC. All Rights Reserved.
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
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