Location, Location, Location

By Generational Equity


There is an old saying in retail that location is everything. Well, in reality, as we have seen over the years, location, for a number of reasons, can have a big impact when you approach buyers for your business, even if you are not in “retail”.

That is why a recent Financial Times-Nikkei study caught our eye. The FT-Nikkei ranking measured American cities for foreign multinationals to do business in across more than three dozen metrics, which you can review here.

Now avoiding partisan local politics and weather arguments, here is the list of the top American cities, based on the FT criteria, that made the list:

Now you may argue (and many will, I am sure) about these rankings, but the reality remains that location has a big impact on how buyers view your business (not just foreign investors and not just major metro area analysis).

I am reminded of
a deal I worked on years ago, where the buyers were coming in with valuations far above what we expected. We weren’t sure why until we started having conversations with some of them and realized that our client’s business was located on
a little used rail spur, allowing a new owner (with the savvy to work it) the ability to ship items in a less expensive form than what our client was using at the time.

So, you see (and as we say all the time): buyers are often buying what sellers are not even aware they are selling. And location can be one of them. Now if you are located in one of the top 10 cities above, fantastic! But trust me, there are buyers who will find Chula Vista, Fresno, and Bakersfield just as enticing if the metrics of the deal make sense.

The key is approaching the right buyers who will agree with that conclusion. Generational and its team of professional deal makers have years of experience in determining how location may play a key role in not only a higher valuation, but also
simply getting a deal done. Just take a look at our sampling of transactions just the last few years and see how that can be true:

As you can see, unlike many of our regionalized business broker competitors, Generational has sold hundreds (if not thousands) of companies located throughout North America. We can find you a buyer even if you are in Timbuktu…..(wait I will have
to check with compliance on that one).

Bottom line: realize that your location in not only a popular metro area but also where in the metro area, can really impact your valuation. Attend one of our Growth and Exit Planning Conferences and
you will see how.

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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