A client of mine was recently invited to make an offer to buy a business from a close relative of his wife. Both businesses are in a very specialized field in dental appliances, so there is close alignment in the industry, but after a detailed review, the business for sale is targeting a lower-tier of the market with lower pricing but also cheaper materials and lower quality.
My doesn't want to cannibalize his own high-tier segment, so one thought is running the two brands separately for different clients in the same market. This means operating both businesses separately and reducing opportunities to consolidate costs. He is leaning towards declining the buyout, but also has to carefully articulate his message to avoid offending his extended family about their low-tier product line.
Looking for a broader perspective, please share yours.
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by a professional
from Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM)
in Verona, WI 53593, USA
in Verona, WI 53593, USA
2yrs ago
Potential buy within family
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by an investor
2yrs ago
from United States Naval Academy in Colleyville, TX 76034, USA
from United States Naval Academy in Colleyville, TX 76034, USA
Own two completely different segments in the same market? Sounds like an awesome opportunity.
Yes, run as separate brands but that doesn't mean there still isn't opportunity to consolidate costs. Referencing the car comp above, the major car companies target customer segments with a well-consolidated cost base.
For something like this, there's probably cost opportunity in back office, shipping, common supplier scale (even if you're buying different products). Even if you run them separately, having a common knowledge base will make it easier to run.
Yes, run as separate brands but that doesn't mean there still isn't opportunity to consolidate costs. Referencing the car comp above, the major car companies target customer segments with a well-consolidated cost base.
For something like this, there's probably cost opportunity in back office, shipping, common supplier scale (even if you're buying different products). Even if you run them separately, having a common knowledge base will make it easier to run.
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by a professional
2yrs ago
from University of New Haven in Cromwell, CT, USA
from University of New Haven in Cromwell, CT, USA
The question to ask is why is your client interested in the lower tier market for expansion? How are the margins and how does this stretch your clients capabilities - capital and management?
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