Professional Business Acquirers
Buyouts, M & A, SPAC, Special Purpose Acquisition Company, Private Equity, Strategic Buyers and Management-led buyout firms are competing to find and acquire cash flow businesses. According to M.P. Dumon that competition is cutthroat. While this author and many financial reporters have devoted much of their writing to the plight of the private company owner who faces a buyers market over the next five to seven years, the competition among buyers of privately owned and profitable companies is fierce. The dramatic difference between the buyers and sellers is that the buyers are proactive while the private company owners remain inactive, or better stated, reactive to the very sophisticated capital market of which they are apprehensive. This behavior gives the advantage to the proactive professional buyers.
As the professional seekers of cash flow turn over the rocks of the private capital markets, only 20% of private companies plan an exit that can take advantage of the buyer's insatiable need for increasing returns on assets.
On both sides of the transaction, those seeking maximum cash for their assets and those buyers looking to buy cash flow as cheaply as possible, the players could be far more aggressive. That is to say that whether a buyer or a seller, the player must be proactive in seeking their desired end with diligence and specificity.
Once either player knows exactly what they want there is a good chance they will find it. The situation that exists is sellers are so unsophisticated in the realm of the capital market where the liquidity event lives they get frozen in the day to day status quo. On the buy side, while they are sophisticated and experienced, cutthroat competition for abundant cash flow companies is at such a high level new attitudes toward the creation of deal flow must be developed.
The buy side players must change their paradigm for creating deal flow. They cannot share their compelling stories to private company owners who will not listen. The challenge is for these professional buyers of cash flow to find efficiencies in creating quality deal flow. On both the buy and sell sides of an entity seeking a profitable transaction, new and more proactive behavior is needed. Whether you are on the buy or sell side, what can be done differently to create better results?