Buyouts and consolidation of businesses in our industry

[Greg1707]

GP Partners is purchasing businesses/contractors in my area, Northern Viginia. They are looking for businesses with minimum sales of $2.5 million. That is more than my annual sales but still what many would consider a small business. This is a great opportunity for owners without a succession plan to cash out and retire.

It appears the larger companies retain their brand and the smaller ones are rolled into those. APEX is also associated with these transactions.

I am sure other industries have seen this type of consolidation--car repair, funeral homes, building supply.
Any thoughts on how this will affect smaller businesses?

 

[petersonra]

The bottom line is that it is very very hard for small businesses to compete these days. It is virtually impossible for an operation with twenty five or fewer employees to be competitive with wages, benefits, and potential for moving up.

There's also the problem that these kind of small businesses just don't have the capability to do things on the technical side, primarily IT, to keep up with what's going on.

There are niches that these small businesses can be profitable at, but often it is based on the skill set of the owner and his capabilities, and when he is ready to move on chances are that the business is just going to collapse without him. It makes a lot of sense at that point to sell out to an ongoing concern.

Customers will tolerate a lot when they are happy with the face of the business. When that guy is gone, there's a good chance they will move on to someone else that they are more comfortable with.

It is especially difficult for small businesses to recruit new talent these days, partially because small businesses have a very difficult time supplying a competitive wage and benefit program, and appropriate training. It just cost too much to do that for a small number of employees. When you have a thousand employees you can spread the cost over a lot of people when you have five it is very difficult.

Smaller businesses often seem to live off of free pizza and accepting employee quirks that larger companies just can't, as opposed to competitive wages and benefits.

 

[ptonsparky]

I came close to a half million a year or two. One year, early on, it was $13k. That's small business.

Very tough to compete, but those niche are there.
Insurance was about the only thing I could not provide. We did attempt the OSHA but realized soon enough that I would never be able to meet all the requirements. IDK if anybody can.

Fun run for the most part.