Buying a Competitor May Be Better Than Waiting Them Out

During the process of observing the closing of a competing business, the temptation arises to watch them die slowly while picking up pieces and adding them to an existing company. This approach is detrimental to the closing company and the thriving business for many reasons. It may actually cost more in the end than outright just purchasing the struggling competitor.

The owner of the floundering business is hoping for an investor to take the burden from his hands. Becoming that investor could boost an established business through new assets and cash flow. The purchase could also keep these assets out of the hands of a potential threat. An investor who is new to the game may very well bring that company from its knees to its feet fast. Now there is stronger competition where there could have been a merger.

The opportunity to buy a competitor should only become an option if it will benefit a current business. After all, competition is profitable in a consumer society. If the established business would benefit from the competition of another flourishing business, then buy a piece or two but not the whole thing. Merging with a floundering company is risky at best, but the alternative also ensures risk. Assessing current business stability and carefully researching the business in question are key actions in the choice to buy or wait.

Consultation with an industry specialized transaction advisor will help any business owner make the profitable decision. The Tenney Group is an established transportation industry sales company waiting to help make those decisions easier.