Businesses Are Not Cakes: Here’s Why M&A Is Unlike Most Industries

By Irina Jameson, Research Director

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We have all grown up hearing announcements like these; in fact, such marketing has so permeated our world that most of us just tune them out. Still, shoppers of all kinds like to see sales and coupons. We take advantage of a promo for a new lease or fiber optic service, and consider ourselves wise if we walk away with a good deal. Some of us won’t even enjoy making an acquisition unless we feel like we found a bargain!

Why not have an M&A sale?

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Considering that about 200,000 businesses are listed for sale each year in the United States, and less than 1 in 5 are going to find a buyer, wouldn’t using some age-old retail methods help business brokers close more deals, grow the industry, and most of all prevent profitable businesses from falling out of the economy just because the owner couldn’t exit in time?

Business creation, what is behind each seller listing?

Businesses are borne from entrepreneurs who usually have poured a lifetime of elbow grease, blood, sweat and tears into their enterprise. From sketching a business plan, to providing a brand, identity and often breaking the business into pieces and rebuilding it again through its journey, the successful business owner inevitably sculpts something relatable to achieve its purpose, yet unique enough to last. No honorable business worth anyone’s time is mass produced in batches, uniform and disposable. Given today’s trends, we might expect Silicon Valley to disagree, but even Microsoft has a slogan to remind us of what really matters in the end: “We believe in what people make possible.” People. Not computers, not Artificial Intelligence, not more machines automating away every facet of human capability from the bottom up. It’s people.

Behind every function, idea and product is at least one human being, and our creations, whatever their intended form or purpose, depend upon this for their very existence.

Once we recognize the truth that each business is a distinct entity that is more like a person than a car from an assembly-line, everything changes.

Matchmaking- the art of selling businesses

A good partner is typically not acquired with ease, from a conveniently available source. There is no Wal-Friends, Partner Depot, or Home Spouses to visit to pick up our best available match from their shelves whenever the need arises. Online social media networks are also currently failing their main purpose, with most of our inboxes filling up with automated messages aiming to fill sales pipelines using the pretense of making genuine human connections. Bots and fake profiles have done real damage- and let’s not even discuss the disaster that is dating apps. People are increasingly losing faith in these platforms, and no amount of further data harvesting/engineering is going to restore it.

Quality is not quantity; we all know this to be true. We can take a chance and maybe make a fortuitous encounter, but that’s all that’s to be expected. To find a genuine pairing, unless we have time to thoroughly evaluate every listed profile, we seek out a referral from a trusted source or a reputable matchmaker. Selling businesses is just like this. DealStream, BizBuySell and the like have used technology to make listings more available to a larger pool of potential buyers, yet the statistics haven’t improved. Despite their efforts, of the 65,000 businesses listed annually, only about 10,000 deals will happen. With more competition among Private Equity Groups than ever, industry buyers continuously on the hunt for a strategic addition to grow their customer base, family offices and individual investors growing in number each year added to all the other types of buyers, clearly the problem isn’t lack of interest. It’s lack of people.

The human touch

A brochure, banner or catchy jingle won’t do. A new suit, firm handshake, and a mechanical smile with bleached teeth on full display is not enough. You can’t Buy One Get One Half Off, or Subscribe Today for Our Business-of-the-Month Club! There’s no helpful AI assistant that will diligently scrape the interwebs and fetch all the best leads and close all your deals for you. We still need real human business brokers, engaging in genuine communications between buyers and sellers, taking the time to listen and do what no robot ever could: appreciate a work of art, and find where it belongs.

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