2 Big Deals... What Are You Doing?
So Orlando was finally sold and so was Raleigh… one a very large MC distributor whose sale was expected for some time (once the price was met)… and the other a large ABI distributor whose sale surprised quite a few. In both cases far-sighted wholesalers stepped to the plate and expanded their empires. In Orlando the Reyes added a large, strategic footprint in Florida, about 13 million cases. In North Carolina, R.A. Jeffreys continued their acquisition run… adding the important Raleigh market and about 7 million cases. In a relatively short period of time Jeffreys has become the ABI wholesaler in almost the entire eastern half of North Carolina. It is a huge geographic footprint with tremendous growth potential for the next 100 years (at least).
There are many paths to success. However, one can argue the most important first step is to understand your strategic position. Just the process of this analysis is extremely valuable… done properly it forces you to consider all alternatives and it should force you and your management team outside of your comfort levels. Just as important, YOU MUST HAVE A VISION AND STRATEGY THAT EXPLAINS TO PEOPLE WHY THEY ARE WORKING. With a vision that employees can trust you can make big changes in a short time. It’s not about meeting budget, IT’S ABOUT CREATING A BETTER COMPANY.
So, look in the mirror and ask yourself what are you doing and why?
- Do you have a strategic vision which is driving your dynamic business model? The world is rapidly changing and staying in one place simply isn’t an option.
- Do the employees feel like they are part of something bigger?
- Are you leveraging your assets to improve the financial health of your business?
- Does success mean a better quality of customer service AND higher efficiencies?
We’ve encountered far too many wholesalers who were hesitant to change simply because they didn’t have a coherent vision and management where not on the same page.
Steve and I can assist and support your efforts to build a better company and ensure everyone has a grounded, common vision by providing immediate expertise. As your transaction representatives and general management consultants, we become a member of your management team to assist in these needs – sale, acquisition or operational… broad skill sets, lots of “been there, done that”, focused effort, and when the need is over so is the cost.
Far too many players are left out of an acquisition simply because they don’t have the expertise to truly understand how they can make an acquisition work for both the buyer and the seller… far too many distribs walk away from strategic acquisitions simply because of misperceptions and personal biases that they mistakenly allow themselves to get priced out of the game… quite often the issue isn’t actually price but rather the misrepresenting of operational cash flows and the underestimating of synergies within the new business model.
And of course there are those who are simply “bottom-feeders” who are looking for a great economic deal. Unfortunately, these economic buyers never get a deal done and in effect they are letting others determine their future. Although this isn’t my choice, it is a fine strategy IF it is a strategy… if it isn’t then it is a very poor choice. Guess what, there are a lot of great deals out there but they are not necessarily only price driven!
When considering any transaction the need for good analyses to drive good decisions is strong, especially in these times of rapid changes. The quality of the analyses becomes even more important due to the longer-term nature of the potential acquisition opportunities.
Determining who you are and how much a company is worth to a prospective buyer or seller is a good way to keep your “head in the game.” We recommend as a minimum, a quality “base-line” valuation for any proposed transaction you may consider. Additionally, many of our clients use our updated versions of these “base-line” valuations to provide insight for ongoing strategic planning and operations analyses since it provides both refreshed industry comparisons and current valuation references.
Please contact Steve Cook or myself if you have any interest in learning how we can help you create a better company and how to apply “base-line” valuations as a strategic tool for transactions and operating modelling. You’ll be glad you did.