Buying a Business From a Competitor? Do it the Right Way

How do you decide whether to buy out the competition? If the business in question is already struggling, you may think that waiting until it’s completely run into the ground will be the best time to buy. After all, the price will be lower, and the less you pay, the better, right? Well, not necessarily. Reviving a bottomed out business might be more costly than you think, so waiting until the price is as low as possible may not be the best long-term strategy. Besides, someone else might buy it before you finally cave.

Recognizing Golden Opportunities

Whether you’re buying your first transportation business or considering buying out a competitor, you don’t want to pass up a rare and precious opportunity. While businesses go up for sale routinely, it’s not every day that you have the chance to purchase one of your competitors. If you’re considering acquiring a competitor, you need to realize that in addition to the benefits provided by the acquisition of business’s assets and cash flow, you’ll also benefit by eliminating the competition. By buying a competing business in your field and transforming a competitor into a trophy of your business skills, you’ll benefit more than you would by purchasing a different type of business to expand your portfolio.

Making Your Move

While you’re biding your time, you may just be making room for another investor who recognizes the aforementioned gilded opportunity. Most struggling business owners would do almost anything to avoid going into liquidation, and all want to end up with some money to show for their business’s sale. If another buyer wins out, you’ll lose out on more than cash flow because your struggling competitor could, in time, grow into a formidable foe that ends up eclipsing your own business’s success.

Realizing the Gamble

Acquiring another transportation business means dealing with liabilities like transaction costs, financing options, and a certain amount of risk. However, that risk may be less than the risk involved in passing up the opportunity to buy up a competitor. Since predicting the market or future rates is far from an exact science, you simply can’t assume that you’d be able to purchase the business if you continue to wait. Your best bet is to thoroughly research whether the potential acquisition would be a good match for your established business and then make an offer. One you’ve joined forces with a former competitor, your business will be free to grow and thrive like it never has before.

Getting Expert Help

You simply can’t overestimate the kind of help that transportation business brokers like The Tenney Group can give you. A business broker can act as the middle man between you and the company you’re trying to purchase, and with a broker’s help, you are much more likely to successfully negotiate a deal. And it pays to hire a specialized broker because no one understands the ins and outs of the transportation industry like The Tenney Group. To find out more about how we can advise you in your transportation business acquisition, contact us today.