The New (Business) Buyers
Inc. management editor Donna Fenn's "The Buyers" told the story of Bob Hammer and Sue Crowe, the buyers of a small business called BlueJacket's located on the Maine coast. Their experience, it seemed to us, represented several themes in our economy, both recent trends and age-old questions about buying and running companies. Former Inc. Reporter Robina A. Gangemi called Dennis O'Connor, a partner at O'Connor, Broude & Aronson, in Waltham, Mass., to see if he agreed. O'Connor's law firm deals with emerging companies, from start-ups to more established businesses, and counts among its specialties "creatively structuring deals."
Inc.:We've been hearing that large-corporation refugees increasingly are buying businesses rather than starting them. True?
O'Connor: It's a trend that may have started with big-company refugees, but it now includes people who have left their jobs in companies of all sizes, often because they don't have the job security they thought they had. They have the talent, the knowledge, and sometimes the financial resources to get a running start by buying an existing business with experienced employees and making changes to improve the business. Three-quarters of our early-stage-company clients are people who buy or franchise rather than start from scratch. The product, the service, or even the industry itself is not of primary importance to many of them. These people are opportunistic, looking for a business to use their talents. They believe they can take their management talents to almost any business and succeed -- except, of course, in wild-card industries like biotech.
Inc.: Over the years we've been told horror stories about what happens when people bring their big-company skills to small companies. Is their experience any more relevant today?
O'Connor: People from bigger companies are used to working with significant resources. When they find they have to do it all themselves, it's kind of a shock. But in the long term, their organizational talents and discipline come into play and bring real benefits to small companies. That advantage gets overlooked because people focus on the adjustments they have to make in the first few months in the company. But if they can get through that initial period, they can do very well by the companies.
Inc.: Is culture clash inevitable between a new owner and the business's managers and employees?
O'Connor: I've never seen a case when there wasn't any culture clash. What you're talking about is change, and any change is tough.
Inc.: Why do you think people should think twice about buying a lifestyle business?
O'Connor: The business is going to be much more challenging in terms of time than they ever expected, and they won't get financial rewards in line with the effort they put in. It never ends, and it's brutal. If you're working for yourself and doing something you like, it can offset that. But meeting payroll is one of the toughest things in the world, and it doesn't go away.