It’s hard to say if the seller was aware of the changing landscape that was affecting the business. Was it strictly good timing upon the sale? One can never say for certain and my partner and I had a degree of suspicion. Nonetheless, in reality it felt like this;
- The client base that was typically served was now giving us less work
- The average price per project dropped
- Clients were not allowing us to bid due to corporate dictates
- We quoted more jobs to maintain the same amount of sales
What I Would Do Different
It’s almost impossible to get a sense of shifts within an industry. The nuances of a business maybe so slight that detecting changes is almost impossible. But here is what I would do better:
- Speak to as many people in the company as possible – don’t be shy
- Focus on the sales staff and ask insightful open-ended questions ask the following
- How have the clients demands changed over time?
- Why do clients continue to buy from us?
- Which competitors are the most forceful?
- Which competitors do you find more often?
- Spend as much time as possible at the company before closing – listen and observe
- Consider macro changes to the industry served – consolidation? Offshoring?
- Read industry periodicals
- Speak with the company’s clients
- Look at the client list over a long period of time 5 / 10 / 15 years
- Consider the average price per product or service over a long period of time
Just some general suggestions but essentially ask, listen and question everything.