Distributor owners often insist that their companies will be legacy enterprises but most of those businesses haven't earned the right to remain independent.
Sadly the "hope strategy" for remaining independent is fading, as distributor owners face an aging workforce, a shortage of new talent, disruptive technology, intense competition and, perhaps above all, declining customer loyalty. Holding on and hoping for the best is a sure-fire strategy for succession failure.
Why do so many distributors who always wanted to keep their business in the family want to sell now? The textbook answers are the strong seller's market, aging baby boomers and, of course, technology disruption in distribution. These are critical factors, however, I want to suggest another reason for selling: many distribution company owners would strongly prefer to remain independent but have come to realize that they have not earned the right to do so.
The abundance of strong buyers has made selling out easier and more appealing. Aggressive acquisitive dis�tributors that have made a string of deals are anxious to buy. Professional investors, namely private equity funds, see distribution as an attractive place to invest. These experienced buyers put deals together quickly, have deep pockets and know how to rapidly combine businesses to maximize returns.
Does your business meet these critical indicators of future viability when original owners decide to retire? It's not enough to keep insisting that the business is not for sale and just hope for the best, or wait patiently until the right buyer appears. The ownership of many privately-owned distribution businesses aren't realistic about having earned the right to remain independent. Closing the gaps between reality and what is needed to achieve the seven keys is challenging work and takes time.