Some companies don’t want to wait until they’re ready to really expand to slowly squeeze the life out of the competition. Some business owners are intent on making sure that they have market superiority, even if that means spending a lot more money than just daily operations would consume. Some people just don’t like the idea of having to compete with another company, especially if their own is small enough that they don’t feel secure in its chances. So instead, they bring out the checks and deep pockets and try to buy out the Bonita Springs dry cleaners they’ve been neck-and-neck with for so long.
One can probably imagine this is not quite as simple as people initially believe.
For one thing, there are a lot of ways this can go wrong.
If the business is only offering its customer list as its primary asset, attempt to buy that and only that. There is a very good chance that the business in question is actually on the fast road to bankruptcy and total failure, so a purchase would actually be a bad idea.
Another option is to purchase the assets of the company itself, which has pros and cons. On one hand, it means that the targeted business is going to be dismantled slowly over time, allowing the aggressor business to make “payments” in increments. However, to use an analogy, selling a house is profitable, but breaking it apart to sell the fixtures and the floorboards and the wiring separately is more profitable still. This means that the business shelling out for the pats of a company over time is going to be shelling out more money than it would have it if just bought out the competitor entirely.
Of course, a full purchase is good and bad, too. On one hand, it is a very fast way to expand operations and acquire new assets and properties. However, if the company was sold because its brand was dying off, that means the new owner will have to do a lot of work to “rebuild” the image. There is also the problem of outstanding obligations. Did the business have any debts to repay before being purchased? Did it have any lawsuits or other liabilities looming over its head that could be problematic in the future? Is the new owner required to honor any existing contracts, such as with suppliers or labor groups? Any of these can make the purchase more of a headache than a solution.