Learning From Acquisitions That Fall Apart

John McCann sold The Bolt Supply House to Lawson Products (NASDAQ: LAWS) at
the end of 2017.

McCann’s strategy involved learning from the acquirers who knocked on his door.
He invited would-be buyers into The Bolt Supply House and listened to what they
had to say. He was not committed to selling, but instead wanted to know what they
liked and what concerned them about his company.

One giant European conglomerate, for example, approached McCann about selling,
but after a thorough evaluation, they backed out of a deal, worried about McCann’s
central distribution system.

McCann thanked them for their time and set to work turning his distribution system
into a masterpiece. Eventually, Lawson cited this as one of the many things that
attracted them to The Bolt Supply House.

When it finally came time to sell, McCann commanded a premium, arguing that he
had built a world-class company he knew would be a strategic gem for a lot of
businesses. He ended up getting five competing offers for The Bolt Supply House
and eventually sold to Lawson.

When a big sophisticated acquirer approaches you about selling, the temptation is
to decline a meeting if you’re not ready to sell, but hearing what they have to say can
be a great way to get some superb consulting, for free. The investment bankers and
corporate development executives who lead acquisitions for big acquirers are often
some of the smartest, most strategic executives in your industry and—provided you
don’t get sucked into a prop deal—hearing how they view your business can be an
inexpensive way to improve the value of your company.

By |2018-07-30T15:25:00+00:00August 9th, 2018|Value Builder|