Is the business freeze thawing?

No doubt the current economic conditions have dampened enthusiasm for mergers and acquisitions of all sizes. Tight credit and generally slow cash flow throughout the economy have kept many would-be buyers of businesses on the sidelines.

But not everyone is waiting for the all-clear sign to jump back into the water.

Medill Reports Chicago, an extension of Northwestern University’s Medill School of Journalism, tells the story of Shirley Evans-Wofford, the owner of Lambent Risk Management Services Inc., a firm that is taking the plunge into two acquisitions worth a combined $10 million (using bank financing!):

Evans-Wofford, 61, the founder of Lambent, is excited. The impending acquisition of a brokerage firm and a third-party insurance administrator will add eight new employees to her payroll and help her boost revenues by approximately 60 percent.

Even in the midst of the recession, Evans-Wofford’s business rose 13 percent to $1.7 million in 2009. “To see it grow from its infancy state up to now is such a joy,” Evans-Wofford says.

Lambent, which began nine years ago in a small office with three clients, now has about 200 clients and operates out of a plush 6,700-square-feet office on La Salle Street in the heart of downtown Chicago.

So why does a risk-management expert, of all people, think this is a good time to go on a buying spree? What does she know about the market conditions that others don’t?

Evans-Wofford noticed that clients were spending less on insurance as they cut costs in the economic downturn.

She told Medill:

“It’s not so much that we are not getting new clients but their premiums are being reduced significantly. You have to do a double whammy by bringing more clients.”

This is where, she thinks, her acquisitions fit right into her current strategy. “There is no [other] way I can make the dollars that I want to make right now between now and five years,” she adds.

In 2009 she signed up for a Chicago program known as nextOne, which  conducts workshops and classes, some in association with the Kellogg School of Management of  Northwestern University.

Michael Johnson, director of the nextOne program, says that this is an opportune time for Lambent to make the acquisitions. “The disruption in the economy is a time that brings up opportunity. It is absolutely an excellent time for her to consider it,” he adds.

In other words, she’s buying now because she believes those two companies are good fits for her own company and they add value to her business.

These two firms were attractive to this particular buyers, and $10 million (or even half of that) is nothing to sneeze at.

And because they made themselves attractive to Evans-Wofford, those businesses will continue to thrive as part of a larger organization.

My book, How to Sell Your Privately Owned Company, spells out how to make your company attractive to the right buyer.

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.


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