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Corporate Buyers: How to Position Yourself Against the Competition

Corporate Buyers: How to Position Yourself Against the Competition - Accelerated MFG Brokers
⏱ Reading Time: 3 minutes

Are you thinking of acquiring a manufacturing company? If so, it’s important to understand that when a truly interesting opportunity arises, there are likely to be multiple potential corporate buyers. After all, as Forbes points out, for a seller, the only thing better than getting an offer to buy his or her company is getting two offers to purchase it.

In other words, it’s in the seller’s best interest to get as many serious offers as possible — not only to get the best price for the company, but also to find a corporate buyer who’s committed to taking the business to the next level. In today’s market, it is not uncommon for quality companies to attract multiple offers.

In short, if you want to beat the competition and close the deal, you need to know how to position yourself to make your offer appeal the most to the seller.

Important Points to Consider

Before you ever have any contact with the seller, it’s advisable to consider the following points:

  • The seller has to like the buyer: Few people are likely to sell their business — the one they spent years of their life building — to someone they don’t like. That means you need to leverage your people skills and present yourself in a manner that will appeal to the seller. The more he or she likes you, the better your chances of sealing the deal.
  • The seller is looking for evidence of the buyer’s character: He or she has a strong emotional attachment to the business and will be concerned about the continuity of the company, the treatment of the staff and the likelihood the buyer will pay the seller’s note as agreed. You should be authentic, carry through on promises and commitments, and be honest when discussing the potential deal.
  • The buyer is often wealthier and more educated than the seller: Maybe you have an MBA from an Ivy League college and have been making a six-figure salary for the past two decades. However, arrogance isn’t a characteristic that will help any buyer win a deal — in fact, it’s more likely to scupper it. Always treat the seller as an equal and be respectful of his or her accomplishments. After all, no matter his or her education and financial status, he or she was able to build the company you’re interested in buying.

Avoid Complexity in Your Documents

Many corporate buyers come out of very large companies, where corporate dealings usually involve long, complex documents. Some buyers are in their early fifties and are looking for a business they can acquire and expand over the course of a decade, then sell for a profit before they retire.

Others want to acquire a business and expand it to further grow their portfolios. Both types of corporate buyers are used to functioning at a high level in the business world.

In contrast, sellers are mostly entrepreneurs who’ve built their manufacturing companies from the ground up. While they might have an acute business sense, few are accustomed to dealing with lengthy documents that contain a lot of legalese. This can lead to issues with documents such as a letter of intent.

The best way to approach creating the documentation, especially the letter of intent, is to tailor it to the seller’s priorities. He or she will be looking for the points that are important to him or her — such as the sale price, as well as the treatment of the employees and suppliers, the continuation of specific product lines and more.

In addition, the following tips can help you craft a winning letter of intent:

  • Opt for a clear, concise approach.
  • Be authentic and forthright.
  • Less is more when it comes to corporate-speak — avoid using business jargon that the seller might not be accustomed to.

Know When to Walk Away

Of course, there’s only so much you can do to enhance your chances of closing the deal. While sellers are only going to be interested in serious offers, you need to know what your cut-off point is. As The Balance Small Business advises, you should avoid getting so caught up in the process that you wind up offering more than you intended to. Be prepared to cut your losses and walk away.

Corporate Buyers Work With an Experienced Business Broker

If you’re serious about acquiring a manufacturing business, it’s a good idea to work with a business broker knowledgeable with companies in this sector. He or she will be able to advise you how to position yourself to highlight those aspects of your offer that are most attractive to the seller. And that, in turn, will maximize your chances of your bid being the winning one.

About Frances Brunelle

Frances Brunelle is the founder of Accelerated Manufacturing Brokers, Inc., which specializes in the sale of lower middle-market manufacturing companies nationally. Fran and her team help to ensure the continuity of U.S. Manufacturing by transitioning ownership to the next generation of entrepreneurs. Recently Fran was named to 2020 Most Influential Women in Mid-Market M&A (Mergers & Acquisitions). Fran is also the host of the WAM (Women and Manufacturing) podcast, a Jacket Media production. Fran writes on topics that help manufacturing business owners prepare their companies for sale and navigate the sale process to ensure a positive financial result in support of their retirement.

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