Learning From Acquisitions That Fall Apart
John McCann
sold The Bolt Supply House to Lawson Products (NASDAQ: LAWS) at the end of
2017.
McCann’s strategy involved
learning from the acquirers who knocked on his door. He invited would-be buyers
into The Bolt Supply House and listened to what they had to say. He was not
committed to selling, but instead wanted to know what they liked and what
concerned them about his company.
One giant European
conglomerate, for example, approached McCann about selling, but after a
thorough evaluation, they backed out of a deal, worried about McCann’s central
distribution system.
McCann thanked them for
their time and set to work turning his distribution system into a masterpiece.
Eventually, Lawson cited this as one of the many things that attracted them to
The Bolt Supply House.
When it finally came time
to sell, McCann commanded a premium, arguing that he had built a world-class
company he knew would be a strategic gem for a lot of businesses. He ended up
getting five competing offers for The Bolt Supply House and eventually sold to
Lawson.
When a big sophisticated
acquirer approaches you about selling, the temptation is to decline a meeting
if you’re not ready to sell, but hearing what they have to say can be a great way
to get some superb consulting, for free. The investment bankers and corporate
development executives who lead acquisitions for big acquirers are often some
of the smartest, most strategic executives in your industry and—provided you
don’t get sucked into a prop deal—hearing how they view your business can
be an inexpensive way to improve the value of your company.
*** Richard Kranitz (Wisconsin) is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection. Attorney profile at: https://solomonlawguild.com/richard-a-kranitz-esq
