InSight

Exit and Growth Strategies for Middle Market Businesses

Now Is the Time to Buy!

By Jim Zipursky | Dec 04, 2009
Singing In the Rain

No doubt, for the past 18 months, the current economic crisis has hung over our heads like a summer storm over the Great Plains.  We are certain it will pass, but its rains and winds can produce lasting damage for all in its path.  In times such as these, we can either seek the comfort and security of shelter, or, more aggressively, we can learn to sing and dance in the rain.

Recently, I was invited to attend a recent summit of CEOs of mid-market companies.  I heard many CEOs who literally shouted: “Now is not the time to seek acquisitions because we do not know if we have hit bottom yet,” “Banks are not lending like they once did,” “How can we consider an acquisition now when we have our own business challenges?”  These were common themes and common statements during presentations, around the lunch table, and at the bar during cocktail hour.

However, a few of CEOs, those who I will call the “enlightened elite” embraced an alternative approach, exclaiming for all who would listen: “There has never been a better time than now to make acquisitions. The time to make a strategic acquisition is when valuations are more reasonable, as they are today, when there are sellers who have good companies caught by the current economic mess, and when others in your industry are not in a position to take advantage of these opportunities.”  One of these CEOs said, “Many of the world’s greatest fortunes have been built during challenging economic times such as these.  You can either get on the field and play the game or sit on the sidelines and watch as your competition passes you by.”

These enlightened elite are actively seeking out acquisition candidates for their companies.  They have already lined up the necessary financing with their lenders of choice.  They told me they are seeing more reasonable priced acquisition opportunities than ever before.  “I looked at a strategic acquisition in late 2007 and was one of 50 companies invited to bid on the deal,” one CEO reported, “The winning bidder’s financing fell through and the seller took the company off the market.  Last week, we were invited to revisit the company; we are the only buyer looking, and our offer, which was slightly lower than what we were willing to pay 2 years ago looks like it will be accepted.”

If you had not considered making an acquisition now because of the uncertain economy, perhaps you need to rethink your ideas because you may never have a more opportune time than today to make a deal.  Take a cue from Gene Kelly: grab your umbrella and learn how to sing and dance in the rain.

posted by Jim Zipursky


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