How important is direct experience in the industry?

searcher profile

April 17, 2020

by a searcher from University of Vermont in Boston, MA, USA

I am in the beginning stages of a self-funded search and trying to determine how important it is to have direct or specific experience within the industry of the company that I would ultimately acquire.

I am wondering if I should target an industry I know better, or not worry as much about industry and focus more on the company itself and its potential to grow.

What have fellow searchers and successful acquirers focused on in terms of matching their experiences with the companies they're targeting & acquiring?

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commentor profile
Reply by an intermediary
from Indiana University at Bloomington in Carmel, IN, USA
Knowledge is valuable, but many of my clients purchase a company that they didn't know existed. My last 3 companies were a Parking Garage Guidance Company, a Museum Surveillance Company and a Planetarium design company. Most businesses you have an owner who started the company 20+ years ago in a garage and was 100% the "widget" guy and now spends 90% of their time with sales/marketing, finance and people management and is not very good at these functions. So it is very important that the buyer has this business experience as they can learn the technical aspects. If you buy a company where the owner is exiting, and the company is more than###-###-#### people, there usually is a subject matter expert who has been running the day to day part of the business and usually blossoms when the handcuffs of the existing owner is taken off.
commentor profile
Reply by a searcher
from Temple University in New York, USA
Hey Max - you put this softball lob into my wheelhouse! In speaking to searchers, I've found that understanding business fundamentals trumps industry experience. Being able to use a tool (like IBISWorld) allows them to fill in the initial gaps. What I think is more critical is making sure businesses fit into your specific search criteria and being able to quickly weed out the ones that aren't aligned with your ideal structure.
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