Three sales of owner-run businesses were reported on 3 and 4 November, and none went to a first-time buyer. Two were bought by trade buyers, companies already working in the same field. The third was bought by an investment firm. If you are hoping to buy a business, these are the kinds of buyers you may be up against.
01The three deals
According to TheBusinessDesk, Palletower, a storage and logistics equipment supplier based in Sale, bought Marcher Storage Systems in Wrexham. Marcher designs and supplies industrial racking and shelving. It is Palletower's seventh acquisition in 24 months.
VGC Group, a West London recruitment partner to the infrastructure industry, bought We Are Footprint. The Cheadle firm was founded in 2012 and supplies staff to the construction industry.
Investment firm Veloom bought MBE Fabrications, a Spalding engineering business founded more than 50 years ago. It employs more than 50 people and exports to 17 countries. The deal was part-funded by a lender, and the price was not disclosed.
02Why sellers often like trade buyers
A trade buyer already knows the sector. It may have cash or bank facilities in place, and it has often bought businesses before. To a seller, that can make its offer look more certain.
A buyer with a track record can also move quickly. Speed and certainty often matter to a seller as much as the headline price.
03Competing with trade buyers as a first-time buyer
You can still win a deal against a bigger buyer. The way to do it is to remove the seller's doubts early.
Show how you will pay before you make an offer. Our guide to proof of funds when buying a business explains what sellers expect to see. Give the seller a realistic timetable too, so they know when the money will arrive.
Then think about what a trade buyer may not offer. Some sellers care about keeping the name, the team or the location. If you plan to keep all three, say so.
The finance is often the part that decides it. Talking to a broker about business acquisition finance before you bid means you can show the seller the funding is real.
