Every business owner is approached frequently by would-be buyers probing sale.  If the owner courted each and every such prospect, it would be the ONLY thing he does in his business.  19 in 20 of such approaches are intermediaries trolling for new work, or are bargain-hunter “strategic buyers” – who look constantly and tirelessly for bargain deals in the marketplace.

However, sometimes, the buyer is real, has money, and is serious in intent.  Owners need to remain alert and be ready to capitalize on the rare and golden opportunity that will some day come along.  When you sense that you have a real and enthusiastic suitor, who is likely to pay the premium – get help.  Professional intermediaries will in virtually every case justify their fees in significantly increased pricing.

Making a Prudent Move

Our firm performed consulting services for one of the nation’s largest unemployment service companies for several years.  This company was approached a couple of times every year by well-heeled and very substantial providers of other services to the Fortune 500.  Our client had relationships with about half of the Fortune 500, with the unemployment consulting services they provided.

We entertained proposals from several of these suitors over the years – but our client’s mindset as to “price” was extremely high, so most we ended up passing on.  Finally, about 3 years ago, our client was approached by a slightly small, but very well-capitalized publicly held suitor, with a substantial war chest for just such an acquisition.  Our client at the time was slightly over $30 million in sales.  They hired us to help in negotiations.  We sold the company to the public suitor for $80 million – all cash!  On the same day, the same buyer also purchased our largest unemployment-consulting competitor – which was larger than our client, and more profitable.  The competitor got $40 million, on the same day that we got $80 million for sale – so their investment in professional help paid off!

Over the years our firm had probably been paid about $100,000 per year for services to consult and consider proposals.  The $80 million they got for that sale made their expense to review alternatives show as a pretty prudent move.  Our client would tell you that they never would have achieved that superb pricing without our help.  They capitalized on the moment – like true premium professional management!  (By the way, that client was 100% owned by an ESOP.  Happy day for a lot of long-term, hard-working employees – who built that great company!)