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An industry for sale – the seller’s struggle

By Bill Yeargin

The boating industry is going through substantial changes – more than it ever has. One significant factor impacting our industry is a generational change in leadership. With many of our boating industry leaders looking toward retirement, the leadership of our industry will be much different in a few years.

A significant catalyst driving this change is the desire of many business owners to hand off their businesses to new ownership. Many of these owners have invested their lives in building a business and believe the time has come to step back and enjoy the fruits of their life’s work. Often, this involves finding a new owner for their business.

Our company, Correct Craft, has been actively acquiring boating industry businesses for several years and have developed a reputation as a premier buyer both pre- and post-close. Consequently, I am often approached by owners of companies in our industry either asking for advice or inquiring about our interest in acquiring their company. Just within the past two weeks I have been approached by owners of five companies in our industry asking about our interest in acquiring them. Many of these owners think that the market may be peaking and, when combined with some highly publicized deals at higher than normal valuations, these business owners are also thinking now may be the best time to sell.

The past 20 years I have reviewed a multitude of deals from both a seller’s and buyer’s perspective. I have worked with many sellers who were trying to decide the best way to sell their business, while also protecting the legacy they have built.

Unfortunately, according to the Harvard Business Review, 70-90 percent of mergers or acquisitions fail. However, most sellers who have invested their lives building their business don’t want to see their “baby” fail after selling, regardless of how much money they collect. This can be gut wrenching for sellers and I know many people in our industry are going through this right now. It is what I call the “Seller’s Struggle.”

The “Sellers Struggle” happens when owners selling their businesses wrestle with choosing between either optimizing their business valuation or selling their business to someone who will care for their brand, employees and legacy. I have dealt with many sellers who have found this struggle to be gut wrenching.

A couple reasonable questions include: Why is there a struggle in the first place? Why can’t the same buyer who will protect the brand, employees and legacy pay the top price? These are great questions and come back to the 70-90 percent merger and acquisition failure rate reported by the Harvard Business Review.

In my experience, those that overpay for a company often find themselves having to take more draconian steps to justify their investment. Also, many buyers have a clear exit strategy the day they buy the new company and have high financial targets they need to meet in a short timeframe. Buyers who value the brand, employees, and seller’s legacy tend to be longer term buyers who need to buy right to be able to not only invest in the brand but also weather the business cycle and other inevitable challenges.

My recommendation to sellers is to ensure that their brand, employees and legacy are in good hands. Most sellers will never spend all their money but they will be significantly impacted by what happens to their business after the sale.

There will be much change in our industry in the years ahead. However, let’s hope those who have done so well stewarding our industry these past decades will do equally well putting their businesses, and the industry we value, into hands of those who will build on their significant accomplishments in a way that protects their employees, brand and legacy.

Bill Yeargin is the president and CEO of Correct Craft.

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