Narrowing the guardrails

September 23, 2019

by a searcher from The Ohio State University - Max M. Fisher College of Business in Cleveland, OH, USA

My wife and I have just started our search for a business (in Northern Ohio) and our guardrails are currently fairly wide. We're starting this way as we don't want to initially exclude a business we might not otherwise look at and our goal is that by looking at more than less, we get better at what questions to ask as well as data points to keep an eye out for.

Does anyone have any thoughts on how and when its best to narrow the search guardrails? Thanks, Bob

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Reply by a searcher
from University of Akron in Raleigh, NC, USA

First off, Go Bucks! (Columbus native here). Second, from what I've gathered thus far, most feel it's very difficult to narrow your search by both geography and industry. There are just so many boxes to check (high quality business, growing, ready to sell, want to sell to you) that narrowing the field by both geography and industry/type can limit options dramatically. Focusing on just Northern Ohio already sounds pretty narrow unless you have an appetite for businesses outside of the traditional search model that pose more risk (i.e. less than $1M EBITDA, retail, more cyclical etc.).

Reply by a searcher
from The University of Texas at Austin in Fort Worth, TX, USA

There is a danger in being a 'jack of all trades, master of none' type in that (a) owners will quickly figure out you don't know their business/industry and many will be turned off by it and (b) you won't have the knowledge to make effective valuation judgments. Picking a few industries and getting smart on them, turning over all the rocks in that niche, and then moving onto other industries later if necessary and doing it over again seems to work better in my opinion.

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