One of the first steps taken by an acquisitive individual or business owner looking to purchase a business is to hunt around online. This can involve any number of public or subscription websites and then approaching accountants, business brokers and business owners directly. It can take time and be ultimately frustrating. It is worth early exploration if only to get a feel of what is out there.
However, for most buyers, looking online only yields a handful of opportunity. By limiting yourself to just these kinds of deal sources, you are seriously reducing your deal flow and hence the chances of achieving a successful acquisition.
Broad acquisition criteria, focused in a sector that experiences a lot of activity, may yield a reasonable number of on-market opportunities. Yet this only paints part of the picture.
In many cases, the owner has been guided to an unrealistic valuation from an advisor. Furthermore, attractive opportunities interest many buyers, potentially leaving the acquirer at a disadvantage when it comes to negotiation.
On the other hand, when working with relatively tight acquisition criteria, the number of opportunities on-market is likely to be insignificant. Therefore, waiting for the right opportunity to come along can be ineffective.
Researching, analysing and approaching companies that are not currently for sale can significantly increase deal flow.
Business owners may be thinking about their exit plan and open to exploring a genuine approach. The ability to consider selling the company without having to go ‘on-market’, can be appealing. It can avoid alerting competitors and existing staff, providing an incentive for business owners to explore such engagements with discretion.
It is often the case that you are the only party in discussions with the owner(s). From our research, fewer than 30% of companies sold were ever for sale, underlining the importance of off-market activity.
Nevertheless, for the greatest reward, it is critical to cover as many off-market opportunities as possible, to leave no stone unturned.
This requires significant research and analysis of businesses that fit your criteria. Then, the prospecting of these opportunities to determine whether there is interest in exploring the approach.
All of which requires a considerable amount of time and investment in licenses for various data sources, but gives a much stronger return on that investment when measured in opportunities to acquire.
It is vitally important, therefore, that an off-market approach is as comprehensive as possible when looking to purchase a business.
As a specialist agency, Unloq is fully equipped to help you in your acquisition plans. We subscribe to various data sources, ensuring broad and deep access to detailed financials and company information.
Additionally, with formal representation, your approach is viewed as less hostile, and decision-makers are more receptive to entering into discussions. This is particularly important if targeting competitors, who may reject direct approaches, particularly from the competition.
If you are looking to purchase a business and want to maximise your deal flow, contact us on 01962 609 000 for an exploratory conversation.
We also capable of assisting in the latter stages of due diligence, offering support in valuation, negotiation and deal structure.
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