Most Likely Buyers: When a client employs TGI to sell their company we search our databases to identify the most likely acquirers. We first examine the database of the market segment where the clients company is focused (i.e. DB: Baked Goods, DB: Sauces, DB: Frozen Entrees, DB: Distributors, DB: Importers, etc). We will also review some other databases: DB Buyers: Companies looking for acquisitions; or Executives looking to acquire a company. Each of our 42 databases contain on average over 400 companies, each database is focused on a specific segment of the market, or focused on specific requests by companies or executives to notify them when companies in certain market segments come up for sale.
Focusing the Search
Manufacturing & Processing Companies: If for example, our client manufacturers frozen desserts, that is one of the first databases we would examine. With over 500 companies in this particular database, we would try to narrow the search for a prospective acquirer by size (revenue), types of product (cakes or pies), location of the company, channels of distribution (grocery, food service, etc), profitable or turnaround, etc.
DB: Buyer’s (Companies): We maintain a database of all companies that have indicated that they are in the “acquisition mode.” Some companies will only focus on their specific market segment, others prefer the “conglomerate” approach of having product lines or companies in different market segments. This database will be reviewed to identify individual companies that may have an interest in our clients’ company.
DB: Buyer’s (Executives): This database contains individuals that have been “downsized” from large corporations and have been given a “golden handshake — a large cash settlement. It also contains executives that have already sold their company, enjoyed retirement for several years and now desire to “get back into action.” This can be a very productive field from which to draw prospective acquirers.
Competitors: Before we contact any likely buyers we submit a list of prospective targets to our client. Clients are usually reluctant to have us contact competitors, because they are concerned about how this will affect their ongoing business (See Point of View 36). However, a competitor is the most likely company to have an interest and a willingness to pay the most for your company. Having a third party make the initial contact with selected competitors, ascertain their level of interest, get the proper confidentiality agreements signed, and manage the relationship is a good way to assure the seller receives the highest amount possible for their company in today’s market. This is not to say however, that some competitors or other companies where a miss-understanding has occurred or that the client doesn’t trust, should be contacted. They shouldn’t. But remember, a good competitor knows your company and its good reputation, knows your product lines and their quality and has been trying to sell to your customer base. They will also enjoy efficiencies in manufacturing and economies of scale (office, sales force, purchasing, etc) that other companies will not have.
Download this article as a PDF: POV_35 Competitors are likely buyers