Sunday afternoon on St. Patrick’s Day 2024 the NCAA selection committees for the Men’s & Women’s College Basketball Tournaments announced the teams that will be playing for this year’s national championships. 32 teams guaranteed their selection by winning their conference championship tournaments.  36 teams were selected from the 320 teams that did not win their conference tournament championships based on a variety of metrics including their number of wins, strength of schedule, and the quality of their wins.  Many well-known west coast colleges were left out including the University of Washington, Oregon State, UCLA, USC, Cal-Berkeley, and Stanford. The decision of who to select is a difficult process destined to result in frustration for many players, coaches, and fans.

As difficult as it is to secure a place to play in the men’s & women’s college basketball tournaments, affectionately called “March Madness” by fans, the search for a business to acquire is much more difficult.  The NCAA basketball tournaments each have 352 teams vying for 68 slots.  A quality company will potentially have 100’s of qualified parties vying for one unique business.  IBA recently facilitated a sale where over 100 parties inquired about a company, a double-digit group made offers, and the winning buyer paid a half million more than the asking price to secure the opportunity and complete the transaction.   Multiple offers are a common occurrence at IBA for the quality companies we represent for sale as one of the most selective firms in terms of project selection in the nation. Buyers come to IBA to purchase our client’s companies because they are intelligently priced, a significant majority of our projects sell within 10% of their offering price; an environment of full disclosure is created; best practices are employed; and the firm has nearly fifty-year reputation for facilitating “win-win” transactions.  Many of the companies we represent for sale sell to participants in our Buyer Database Program (https://ibainc.com/buy-a-business/acquisition-process/), with limited or no time advertised for sale in the public domain.

IBA recommends buyers actively seeking acquisitions in the Pacific Northwest participate in our Buyer Database Program.  We acknowledge that we are not the only venue that offers businesses for sale, but also know that we have sold more businesses (4300+) than any other firm in the region and frequently have more businesses for sale and companies of better quality than our competition on the market.

We also recommend that any buyer seeking an acquisition clearly define the following metrics before evaluating potential business purchase options:

1. The geographic footprint for potential acquisitions. A significant majority of companies cannot be easily relocated due to the location of their facilities, employees, and customers.   A significant majority of buyers will not relocate to complete an acquisition due to the employment of a spouse, the education of their children, home ownership, or community connections.   If a company cannot be executively managed effectively after a transfer of ownership, the probability of success for the acquisition will be diminished.  It is recommended that acceptable locations for business acquisitions be clearly defined before starting evaluations of opportunities to mitigate the waste of time for both buyers & sellers.
2. The industries of potential acquisitions. Industries matter when purchasing a business.  This is true because relevant knowledge & experience enhances the probability of post-acquisition success and the ability to secure bank financing.  Business buyer expectations should be that business sellers will prefer buyers with relevant knowledge & experience out of consideration for their employees, customers, suppliers, and self interest, if seller financing is requested as a deal component.
3. Available Acquisition Capital. “Skin in the game” matters in business acquisitions. Sellers want to know that a buyer is vested in a transaction.  Liquid capital also enhances the ability of a buyer to achieve the necessary capital injection and debt service ratio requirements to secure bank financing to support an acquisition.
4. Signature Power. Many buyers are sold by SBA bankers that they can buy businesses up to $6 million in value by injecting $500,000 into the acquisition and having the seller finance $500,000. Theoretically this is true.  However, it is also true that most sellers will look for more financial strength than a subordinate position behind a bank on the assets of the company they are selling in a retirement sale and that most landlords will only assign and/or extend facility leases for parties that are equal or greater in signature power to the party selling the business, if the seller desires to be released from liability related to the lease upon the transfer of ownership.

It is also recommended that potential buyers assemble a transaction team of an accountant, attorney, and banker and/or investors before starting an acquisition search, so the ability to move quickly exists when an interesting business opportunity is identified.

If a business is identified that is in the right location, industry, and within the financial ability of a buyer to acquire, timely execution of assessment and negotiations should be pursued, or the opportunity may evaporate before action is taken.

IBA is empathetic to the frustration experienced by many qualified parties looking for business acquisitions in the marketplace.  We recognize that it can take a motivated buyer who negotiates in good faith seeking a “win-win” transaction months or years to find a suitable acquisition that matches the four metrics associated with selecting a business for purchase identified previously.  IBA’s team of M&A intermediaries wish they could order inventory of mature, profitable privately held companies to satisfy this demand.  Unfortunately, we cannot.  We can only stay available as a resource to the entrepreneurial community for when the time is right to sell their businesses.  That said, IBA, uniquely in the business brokerage community, does have a nearly limitless offering of business models available for sale in almost every industry that can be located anywhere through our franchise sale division (https://ibainc.com/what-we-do/franchise-sales/).  We are happy to discuss these opportunities with anyone who cannot find a business for sale in an industry and/or location they desire.

In the NCAA basketball tournament, a team will not win games and advance, if they do not put the ball in the basket more times than their opponent.   The same is true with buying a business.  If you do not make an offer and complete a transaction, you will never move forward from being a potential buyer to being a business owner.  IBA welcomes the opportunity to support the purchase of businesses whether the end acquisition is an existing company or a new franchise.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, legal, and accounting communities 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”.