There is a strange conventional wisdom about negotiations. It goes something like this: if both sides are grumbling after the deal is done, it must be a good outcome. Behind this backwards truism is the idea that if no one got too much and no one got too little, all is well in the universe.
In the world of collision shop acquisitions and negotiations, the rules are even more complex, in part due to the fact that the acquiring entity (buyer) is usually larger than the selling entity. This is accentuated even more when the buyer has prior experience in acquisitions and the seller has never dealt with the process. This dynamic – the belief that the buyer is in a superior bargaining position because of resources or experience – can color the process no matter the size of the deal.
Whether you are considering adding your third shop or your 23rd, there are a few things all buyers should be aware of. They are deeply rooted in respect for the owners and businesses you are contemplating buying and the belief that the best deals actually do yield a happy buyer and a happy seller.
The acquisition courtship
A 10-unit business in a geographic market wants to acquire a one-unit business in the same market. The dominant MSO in a state wants to venture into an untapped segment of the same state. A multi-state MSO wants a new platform in a new state. Regardless of your size or influence, whether you are approaching a healthy business or one that is struggling, if you’re looking to acquire another business, you have a choice to do it with a new-sheriff-in-town attitude or not.
Too often we hear of MSOs forebodingly approaching potential acquisition targets, implying that if the seller does not enter into a transaction with them, the seller’s business will be on shaky ground. While a seller may actually be in a precarious position, why make or insinuate a threat in the early stages of a courtship?
Anyone who has owned and operated a collision business has thick skin; it’s required. To be clear, this is not about tender feelings – it’s about respect. That business you’re looking to acquire is someone’s life, and it is precious to them. In most instances, the seller knows the landscape where they operate better than you, and they may be poised to sell. They just don’t want to sell to you, Mr./Ms. New Sheriff. You’ll have to trust me on this.