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  • Business Buyer Demographic Groups

    Mar 25, 2015

    Our firm is approached weekly by financially qualified parties interested in negotiating in “good faith” in a confidential environment toward the acquisition of privately held companies. We commonly observe in our office that as professional transaction facilitators, we wish we could order businesses to satisfy this consistent demand and address it with a Nordstrom level of customer service. Unfortunately, a seller representation oriented business brokerage firm with the quality standards of IBA cannot order inventory. The process involved at IBA for bringing a privately held company to market is analytical, educational, detail oriented, and commonly involves a business owner that does not need to sell, but wishes to complete a transaction.

    The parties that contact IBA interested in purchasing privately held companies and family owned businesses can be divided into four demographic groups.

    The first group is entrepreneurs wishing to acquire a business motivated by executive management, career control, independence, and return on investment objectives. This group has business buyers interested in the complete spectrum of industries, geographic locations, and transaction sizes represented by IBA. It includes individuals, partners, families, companies, and privately equity firms.

    The second group is companies wishing to increase their market share horizontally in a specific industry. These parties have very specific transactional goals in terms of industry, but are willing to evaluate appropriate acquisition opportunities in a spectrum of geographic locations and transaction sizes. The diverse transactions IBA has facilitated previously to facilitate horizontal, industry growth have included professional practices, manufacturing, distribution, service, and retail companies. In some industries, (e.g., collision & auto body repair); there is a probability that the buyer will come from this group.

    The third group is companies wishing to grow through acquisition of businesses vertically in line with their business model. These parties have specific transactional goals in terms of industry and are cognizant of location and transaction size in the evaluation of synergistic benefits and potential acquisitions. The transactions IBA has facilitated previously to facilitate vertical growth have included manufacturers & wholesalers buying retailers, wholesalers and manufacturers buying each other, retailers buying manufacturers & distributors, service providers acquiring other service providers, and companies acquiring transportation & logistics partners. It is important when assessing potential vertical acquisitions that the merger creates synergistic benefits that were not available to the company prior to acquisition.
    Buyers acquiring companies motivated by horizontal & vertical integration goals can be both domestic & international in nature. An example of an international transaction facilitated by IBA, involved the sale of a floral wholesale business to a company from Ecuador that had rose growing plantations. The transaction benefited both companies as it allowed the international company to use an established distribution network and the wholesale company to offer quality products at competitive prices to its customers. A “win-win” transaction facilitated in an environment of full disclosure is always a transactional goal at IBA.

    The fourth group of buyers that interacts with IBA on a regular basis is investors. These parties traditionally are buying businesses to generate a better return on investment on their capital than is available in the real estate, equity, or bond markets. IBA has a difficult time finding suitable acquisitions for this group, as the businesses we sell traditionally need direct executive management by ownership and will sell at a higher price to parties from the first three groups than arm’s length investors.

    IBA has sold businesses to buyers from each of the four demographic groups. We welcome the opportunity to talk with anyone interested in acquiring a business in the Pacific Northwest.

    IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community on subjects relevant to the purchase & sale of privately held companies and family owned businesses. IBA is recognized as one of the best business brokerage firms in the nation in terms of successfully negotiating transactions that are “win-win” in an environment of full disclosure between the parties.

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