Around the Web: A Week in Summary
A recent article posted by Viking Mergers & Acquisitions entitled “5 Hottest Industries to Buy a Business in 2018” gives an overview of what industries we should be paying attention to in 2018 based on market trends. If you’re thinking of buying a business this year, here are a few industries you might consider:
- Ascending Technologies – Technology is a fast paced industry that many other industries will utilize or depend on in the future. Robotics, augmented and virtual reality (AR) (VR), artificial intelligence (AI), 3-D printing, cybersecurity, and cognitive technologies (such as speech recognition) are all examples of this.
- Pet Care – The pet care industry revenue is expected to increase in 2018 with an annual growth rate of 5.4% since 2002. Prosperous sectors of this industry include pet retail, grooming services and boarding services.
- Construction Management – The construction management industry is being influenced by technology and is expected to involve more 3-D printers, drones, and self-driving equipment as technology advances. This means increased spending growth and improved construction trends for this industry.
- Health Food – The food industry is never going out of business and as people become more conscious of their food, health-oriented companies are prospering. The sales of specialty foods reached $127 billion in 2017 as people have become more aware of what’s in their food and look for organic and non-GMO food options.
- E-commerce – Online is now the way that most consumers shop, as the decline in brick and mortar retail shopping occurs. A recent article by Forbes.com stated that 51% of Americans prefer shopping online.
It’s a good idea to look at what’s happening in these and other industries if you’re considering buying a business in 2018, to make sure you’re investing in an industry that will continue to grow and advance.
A recent article from Entrepreneur.com entitled “The 3 Ts of a Successful Family Business Transfer” summarizes the three most important factors in making a family business transfer go smoothly: Training, Transaction and Transition.
- Train your successor – Make sure the person you’re handing down the business to is ready to take on the job and also competent, which may mean they will need some training. Document the training plan and set benchmarks to reach so everyone stays on track towards the goal.
- Transaction – Just because it’s a family transaction, doesn’t mean that corners should be cut, so it’s a good idea to have a lawyer and a business appraiser involved in the process.
- Transition – If the seller stays involved in the business during the transition, it’s important that they have a clearly defined role as the new owner takes over. They may also need to assist with certain client/customer and vendor relationships to ensure that they stay with your company.
Treating the family as you would any other buyer, having a set plan in place and preparing for the transition will help the family business transfer go as smoothly as possible.
A recent article posted by Forbes entitled “This Is Why Companies Make Acquisitions” explores why companies like to buy other businesses. Acquisitions commonly occur when a company has reached the mature phase of their life cycle, where there is no way for them to grow except for taking the market share from another competitor.
The article uses the example of a company called alphabroder, a mature business, who recently acquired a smaller company called Prime Line, who is one of their competitors. These two companies together will increase efficiency in serving their customers and also offer a broader range of products than they could have on their own. This will allow alphabroder to extend its time in the growth phase and therefore be more valuable to buyers.
Mergers and acquisitions can help both companies involved by increasing revenues and reducing expenses, which they could not do on their own. They also enhance a company’s growth and increase their value for the future.