Over the last month we have noticed a number of our personal service providers merging. Lawn care service companies, pest control companies, and even optometrists. The trend is now clear. It makes good sense and it may be good business in today’s environment.
The current economy has retarded opportunity. Small business has cut expense but unlike larger enterprises a greater percentage of their overhead is often fixed offering limited opportunity of just cutting back. Many savvy entrepreneurs are not throwing in the towel but are PUPPING! PUP is “Picking Up The Phone” and calling competitors to explore opportunities to efficiently merge resources and customer bases. Once vicious competitors are now motivated to sit down and talk about a process that has been most popular with big business. Many are finding the dialogue opens a window beyond survival. The combined entities increase margin, lead to deeper customer penetration and offer an improved work life as new partners bifurcate roles and specialize in what they enjoy and do best.
We have spoken around the country about small business M & A activity. These presentations have been popular as entrepreneurs always want to learn how to fulfill the dream of selling out “BIG” and retiring on their boat or at their golf course home. The economy need not evaporate dreams but merely delay them. Beyond survival a well planned and executed merger can increase the value of an enterprise when 1 + 1 does = 3 or more. New strong partners who are no longer vicious competitors are better buyers when one partner wishes to transition to retirement or a new opportunity.
It is true the M & A initiatives can be a mine field. Success requires good targeting, planning and execution. The process can be scary with fear of losing control and autonomy. Many entrepreneurs do not know where to begin. The process is actually simple and begins with PUP. We have worked to simplify what many try to complicate. The chart below is an ideal way for you to view the M & A process.
|Business Reason/Company Need|
|Type of Transaction|
|Final Implementation Plan|
Consider doing a competitive assessment. Consider PUPPING! This may be the ideal time!