The Advantage -Is Buying Your Competitor a Good Idea or Bad?
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Welcome to the next issue of "The Advantage," the Marx Group Advisors eNewsletter that will give you the edge with intelligent M&A strategy. Thank you! Tom Marx and Paul Cooperstein Marx Group Advisors ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Is Buying Your Competitor a Good Idea or Bad? In our 25 years as business advisors and marketing consultants in the aftermarket, countless times clients have asked us "Should I buy my competitor to grow my business?" There is no simple answer, but growing market share and increasing margins/profits through acquisition is often a good opportunity today for the following five reasons. We wrote this article for auto and heavy duty distributors, jobbers and retailers - however the basic principles are in intact: 1. Expand your geographic market One of the biggest recent consolidations was the purchase of CSK by O'Reilly Auto Parts. O'Reilly added stores in Western markets and grew into a nationwide chain in months that otherwise would have required years of organic and new store growth. And they were able to leverage the asset to pay for this rapid acquisition. 2. Take out a competitor One compelling reason to buy a competitor is to eliminate price pressures, especially if the competitor is the low-price leader. With the competitor gone, customers have one fewer location to shop, and your opportunity to market branded and private label products increases. Eliminating a competitor may also reduce the market's advertising clutter. 3. Increase market share and reduce costs for more profits Most businesses organically grow revenues by perhaps 3-5% annually and market share 1-2% annually. Contrast that with a 30% annual revenue growth and 10% annual increase in market share that could be realized by buying a competitor. You also gain leverage for better prices and terms with suppliers due to your larger purchasing power. Increased margins then improve cash flow, allowing you to complete additional acquisitions. 4. Secure valuable supplier contracts A competitor may have valuable, exclusive supplier relationships, including direct imports and direct from US-based suppliers. These contracts, spread across the larger footprint achieved through acquisitions, may generate substantial revenue at higher margins. 5. Gain coveted locations Securing ideal locations - a high-traffic corner location or one that is in the middle of an industrial or auto/truck repair district - may not happen unless you buy it and convert it to your brand. Run the financials to ensure this is smart use of your human and financial capital. We recommend you develop an "Intelligent Strategy" about how to best grow your business. Consider all the pros and cons of acquiring a competitor. Acquisition cost and value is more than just dollars invested. It's also long term strategic positioning as well as your own exit strategy. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Resources AvailableWhitepaper_lifecycle_of M&A [http://rs6.net/tn.jsp?et=1102957588274&s=2397&e=001lr8M-qDDQBAYpRzT36MSgIORYoa7E55eocGOb2jZcP2pa3EpyYjQDttuYnfCSybX321-BLHnnaVGSUGm3TDV1GlG9TTKzdLnofb1aPFZVAnYGV5s00aXCUfpWDGAr_Nn4ltqwFafK5I=] Let Marx Group Advisors be your resource for information about mergers and acquisitions, rollovers, divestitures or equity opportunities for the commercial vehicle, automotive or heavy duty market. There's information at your fingertips that will help take the mysteryout of equity transactions and help give you the edge with intelligent M&A strategy. Just go to: http://www.marxgroupadvisors.com/reso [http://rs6.net/tn.jsp?et=1102957588274&s=2397&e=001lr8M-qDDQBAYpRzT36MSgIORYoa7E55eocGOb2jZcP2pa3EpyYjQDttuYnfCSybX321-BLHnnaVGSUGm3TDV1GlG9TTKzdLnofb1aPFZVAnYGV5s00aXCUfpWDGAr_Nn4ltqwFafK5I=]urces [http://rs6.net/tn.jsp?et=1102957588274&s=2397&e=001lr8M-qDDQBAYpRzT36MSgIORYoa7E55eocGOb2jZcP2pa3EpyYjQDttuYnfCSybX321-BLHnnaVGSUGm3TDV1GlG9TTKzdLnofb1aPFZVAnYGV5s00aXCUfpWDGAr_Nn4ltqwFafK5I=]to see the latest whitepapers and articles that can be easily downloaded as a pdf, including archived articles of our e-newsletter - The Advantage. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Information Spotlight White paper:Transaction Types: Mergers and Acquisitions, Divestiture and Asset Sales, Joint Ventures and Alliances, Going Private FREE DOWNLOAD TODAY! [http://rs6.net/tn.jsp?et=1102957588274&s=2397&e=001lr8M-qDDQBAekLQRuPsYV6S8qIkv0we7w0S8QSLaJvZ_3YmKuqJbzRjo5MJmxw3e7QOPPNIX1gJ14hG4cCnQeRNqtHcFlyvW1dPFDWk7kipv8qAUgRUco2apkeRnyF3uUXgsnX6xNZMZZOQhfeVg0uT02oxCwCNF8ew6RklgHN-K4iHfSoRcpncxwzxyxHEhguvQ68GugoiYoaVAyeDbovI66x7HWuxjn5j2J3E9l5o2CFVTjW-DSQ==] ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Executive Interview with Tom Marx Tom Marx Executive Interview [http://rs6.net/tn.jsp?et=1102957588274&s=2397&e=001lr8M-qDDQBBHOeEQkGsjOZMi0oTvjCW6Zb0-V0rHe9JZlla8os3eZORivJxchXCBMrh9yWb0O2oG-CF5dtkl_kqLMMVYYPmLPrXXK6eNlaK9Ep0AZoZYaKl_gMZ9_fl2Q6bBogNRPcHVNzRPgqnZmfQjHy8sNqqwWANzseFNXwhGY7CrZFsIdF3aLd_6Aq-J0ws4U66P996Z5440LA5url7UPjbG2z7DNBasX0WP84E8pwSp6ETOZNRNTwjIiR8e] Click here for article [http://rs6.net/tn.jsp?et=1102957588274&s=2397&e=001lr8M-qDDQBBHOeEQkGsjOZMi0oTvjCW6Zb0-V0rHe9JZlla8os3eZORivJxchXCBMrh9yWb0O2oG-CF5dtkl_kqLMMVYYPmLPrXXK6eNlaK9Ep0AZoZYaKl_gMZ9_fl2Q6bBogNRPcHVNzRPgqnZmfQjHy8sNqqwWANzseFNXwhGY7CrZFsIdF3aLd_6Aq-J0ws4U66P996Z5440LA5url7UPjbG2z7DNBasX0WP84E8pwSp6ETOZNRNTwjIiR8e] ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ About Marx Group Advisors Marx Group Advisors [http://rs6.net/tn.jsp?et=1102957588274&s=2397&e=001lr8M-qDDQBBdCnqP1lib6rv3Zj42qa3MaWODCljOwzyMkzRMFAWklAJ_XIWVVBtHyyxxdlquHmcwQ9WQs0U944L2wxwgEXxJSwDlFjcDwokx6jbtQq73PB6aRgXe2Nle]offers Intelligent Strategy for mergers, acquisitions and divestitures, as well as assisting with capital formation for private equity placements. MGA/TMG combo [http://rs6.net/tn.jsp?et=1102957588274&s=2397&e=001lr8M-qDDQBBaey4Et_iEuFKeMPrPNV9B-5SBZ3DTZ8l7y-wbVtp1wDE97Hg66hT4B6OcrH7Ztx3JJBoFenv3qWAaPHh9AvSTmJAM4r-72-3zzH_cEKkPyDts12regj6B] For a confidential conversation, call Tom Marx (415) 453-0844, x106 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Share this email http://www.addthis.com/bookmark.php?v=250&pub=ctctproductstrategy&url=http://archive.constantcontact.com/fs069/1102308246552/archive/1102957588274.html Forward email http://ui.constantcontact.com/sa/fwtf.jsp?m=1102308246552&ea=submit@theautochannel.com&a=1102957588274 This email was sent to submit@theautochannel.com by tmarx@marxgroupadvisors.com. 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