Demographics of Business Acquisition Buyers

Dec 13, 2022

Buyers looking to acquire privately held companies or family businesses in the Pacific Northwest are traditionally participants in our Buyer Database Program, the only way a business buyer active in the marketplace can ensure that they get the earliest possible look at IBA’s exclusive sell side representation projects, or become aware of the businesses we represent for sale via our comprehensive marketing efforts on behalf of our clients.  For almost fifty years, business buyers in Washington & Oregon have sought to acquire businesses represented for sale by IBA for the following five reasons:

  1. As the largest business brokerage firm in the region with physical offices in the Seattle, Portland, and Spokane metropolitan areas and a double-digit team of professional business sale intermediaries IBA traditionally has more businesses on the market for sale than any other company at a given time.
  2. IBA is commonly recognized as the most selective business brokerage firm in the region. The businesses we bring to market are successful, profitable, and have quality financials, infrastructure, and staff.
  3. IBA operates with a 100% paid on performance business model. This business model creates a transactional dynamic where our compensation goals are in alignment with a seller & buyer desiring to facilitate a “win-win” transaction where a quality business sells at a fair price.
  4. IBA facilitates transactions in an environment of full disclosure employing best practices. We believe this objective for every transaction mitigates post transaction liability for our clients and creates an environment where buyers want to do business with IBA again either to facilitate growth by acquisition or for the future sale of the company when they seek to sell the asset.
    There are iconic businesses that IBA has sold multiple times since 1975 successfully facilitating a succession of ownership and continuation of a profitable business model that is beloved by customers and employees.
  5. Banks, accountants, attorneys, and wealth advisors recommend doing business with IBA.

The parties who purchase businesses from IBA generally fall into one of the following eight demographic groups.

  1. Companies – It is common for IBA to sell a business to another company. Acquisitions by companies can either be to increase market share (horizontal integration), diversify their product offerings, or control supply or distribution elements of the business (vertical integration). As an example, IBA is active in facilitating the sale of service trade companies (Electrical, Plumbing, HVAC, etc).  A HVAC company can buy another business in the sector to increase their service area and/or staff. They can also buy an electrical business to diversify their offerings into areas like solar or auxiliary power generators that require electrical licenses to install.  They could also purchase a sheet metal manufacturing company to facilitate better pricing on duct work and control of product supply.
  2. Private Equity Firms – A private equity firm is traditionally composed of a conglomerate of businesses.  Businesses can be acquired and operated within an overarching theme (e.g., green economy or geography) or simply for financial return.  Selling to a private equity firm can be a lucrative option for a business owner, as they are often well funded and decisive in action.  It can also be a negotiation where a professional buyer takes advantage of a seller who is not aware of market conditions and the nuances associated with dealmaking.
  3. Search Fund – Ownership of a privately held company can offer investment returns significantly higher than what is possible owning equities or real estate. This reality has created a class of investors who do not wish to executively manage businesses, but have ownership positions.  The problem solve frequently employed by these investors is to locate executives or MBA students interested in running companies who backed by their investment, and often bank financing, purchase companies assuming executive management positions as presidents and CEO’s.  IBA has completed business sales to this buyer demographic recently involving MBA’s from Harvard, Dartmouth, and Stanford and executives who have moved to the Pacific Northwest from Colorado, Florida, and Kentucky to assume executive leadership of companies.
  4. Corporate Executives – It is common for corporate executives to contact IBA who are interested in buying companies. Many of the individuals seek to purchase a business to fulfill a lifelong dream of holding the position at the top of the corporate pyramid, something that is often not obtainable with a public traded company.  A roughly equal number contact IBA to problem solve through an unforeseen change in their work conditions.  The change can be, one common for senior management in the 55 – 65 age group, of being laid off and replaced by younger, hungrier, and less compensated people.  It can also be because they were passed over for promotion or asked to relocate resulting in a negative impact on their family.  IBA takes great pleasure in helping buyers achieve their professional goals and life stability for families.
  5. Entrepreneurs – Entrepreneurship offers many benefits as a career path ranging from independence to creativity to financial compensation greater than that of an employee. The ability also exists to enhance value post acquisition and sell a business.  You cannot sell a job.  IBA has a long history of selling businesses to buyers who own companies 7 – 10 years and then return to IBA to facilitate the sale of the company for a capital gain over the initial purchase price.  The correct way to evaluate a business acquisition investment is to take the purchase price add the annuity earned over the tenure of ownership and then tally the total return on the investment after the company is sold.  The following is a simple example:
    A company with $2 million of EBITDA is purchased for $8 million.  The company is owned eight years averaging $3 million per year of EBITDA over the time period. It is sold for $20 million following a year with EBITDA of $4 million.  This scenario produces the following calculation $20,000,000 – $8,000,000 + $24,000,000 ($3 million times eight years) = $36,000,000 or a 56% return on investment over the eight-year period before taxes.
  6. First Generation Immigrants – America and the Pacific Northwest are meccas for immigration. Few countries in the world or regions in the United States offer more financial opportunity and a better quality of life.  IBA is honored to be a venue where people can achieve the American Dream of business ownership. It is often easier for an international person with capital and executive ability to buy a business than to gain employment with Microsoft, Boeing, or Nike.  We have successfully sold businesses to people from six continents ranging from Tanzania, Egypt, and Morocco in Africa to India, Japan, China, Vietnam, and South Korea in Asia to Brazil, Argentina, and Columbia in South America and to virtually every county in Europe.
  7. Military Veterans – IBA throughout its history has always recognized the contribution people who serve in the military make to protect our nation and preserve the quality of our lives. Many military veterans transition from careers in the Army, Navy, Air Force, Marines, and Coast Guard to entrepreneurship as the next chapter of their professional life.  If you are a veteran interested in becoming an entrepreneur, our doors are always open to you as a resource.  IBA has recently sold businesses to a West Point graduate who served in Afghanistan and a former Navy Seal.
  8. Non-Profit Organizations – Many non-profit organizations purchase businesses to provide revenue for their operations and to facilitate training & development programs for their served demographic group. Creating training & employment opportunities for people with special needs, returning to society from incarceration, or women who have experienced difficult chapters of their lives through the sale of a company to a non-profit organization is both an honor and pleasure for professional intermediaries.

All buyer demographics are welcome at IBA.  The world of entrepreneurship and the limitless opportunities for wealth creation and personal fulfillment it presents in America are blind to race, ethnicity, religion, gender, or sexual orientation.  If you are interested in buying a business or a franchise, we would welcome the opportunity to meet with you and provide an overview of how we work with buyers.   All conversations with IBA are held in strict confidence.  The purchase of a business from IBA has no cost to buyers that are invoiced directly.

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 based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.