My grandfather used to tell me there is opportunity during the economic downturns. I remember how he and his business associates would buy depressed real estate for pennies on the dollar. His friends would buy businesses for bargain prices, get them going again and either keep them or sell them off at a profit a few years down the line.
Well, everything old is new again. Then it may have been on a smaller scale, but according to a recent article in the Los Angeles Times, U.S. and Foreign based businesses are buying up their rival companies at bargain levels. With many companies in the doldrums and looking for a way out, this is a good time to make them an offer. Witness Skechers buying out Heelys, the company that combines sneakers with roller skates, and CVS buying out Longs Drugs, there is some movement.
As for the larger Merger and Acquisitions, the movement is slower than it has been as credit and money is harder to obtain and many private equity groups sitting it out on the sidelines or folding their tents and calling it a day. But there is money being spent on the smaller and mid-sized merger deals, which in todays world, $1 Billion doesn’t seem like a lot of money.
If you are one of the companies looking to buy out your competitors, then you will need to hire new executives, especially, for turnaround and restructuring. Prevailing wisdom would have it, that the ones currently holding the jobs with your rival companies aren’t all that good at what they do, otherwise the company wouldn’t be having so much trouble in the first place. To be more diplomatic, if not precise, sometimes you need specialists in turnaround and restructuring.
As part of your preemployment screening package, you should always conduct federal criminal background checks and federal civil background searches on key executive candidates to be sure they were never implicated in white collar crimes. This could prove embarrassing and hamper seriously your efforts to obtain credit and restructure that business.
It’s an opportune time to look for bargains. But be careful. Often a deal that is too good to be true is simply too good to be true.
Check them out before you hire.
