2nd acquisition - to do or not to do? and when?
March 06, 2025
by a searcher from The University of Chicago - Booth School of Business in Chicago, IL, USA
Looking on tips from folks that have gone through a 2nd acquisition. We recently closed on a niche business after running a self-funded local search and are realizing that a lot of our competitors, not surprisingly, are all folks in their 60s and potentially could be looking into retirement. I've identified a list of 400+ targets and have begun my outreach. However, we did finance with the SBA and I want to be cognizant that we've recently acquired (Oct###-###-#### and that while we may not look to acquire immediately, I would like us to be top of mind to our competitors/potential sellers when they look to exit the industry.
From those that have done it, any tips on:
1) How early is too early? How do you know when it's the right time?
2) How to communicate the message of "we're interested, but not in a rush....but think of us, please?"
3) How did you decide whether to even acquire? vs. organic growth, or both?
Thank you all!
from The University of Chicago in 2122 W Le Moyne St, Chicago, IL 60622, USA
from University of Pennsylvania in Seattle, WA, USA
2.) I would just casually drop it as an FYI and note overthink it - if your space is small, word will get out. I don't think anyone will be offended. It also helps that you just went through this. As you are talking to your competitors you can just say something as simple as... "Just wanted to let you know that as some point, I expect to acquire another business in this space. I don't know what your long term plans are but if you are ever thinking of selling, feel free to reach out. We just when though this with our old owner XXX and I would be happy to grab a coffee and answer any questions, even if you are years away from this decision" I have dropped something similar multiple times and nobody has been offended.
3.) That is personal preference. SMB space has relatively cheap multiples so acquisitions can be your fastest opportunity to scale but combining two separate businesses can be messy as well. Personally, I think merger of equals is one of the hardest because it is not clear whose business takes precedence and there are a lot of a-la-carte decisions (whos ERP, whose payroll, CRM, etc as you work through combining).