Timing Is Everything: The Critical Importance of Timing in Business Acquisitions

By Alan Miklofsky
Updated 10/9/24

When it comes to acquiring a business, particularly in the retail sector like shoe stores, timing is everything. While the idea of waiting until the new year to start the acquisition process may seem appealing, it's essential to recognize that timing can be a crucial factor in determining the success of a deal. Based on my experiences, both personally and through my clients and acquaintances, I can confidently assert that aligning the acquisition process with the right season can significantly impact the overall outcome.

The Role of Seasonality in Acquisitions

In the retail world, especially in the shoe industry, seasonality plays a vital role in sales performance. Different times of the year can present unique opportunities and challenges for business owners. A potential acquirer needs to be acutely aware of these seasonal trends when considering the timing of an acquisition. For instance, a business located on the East Coast may see value in acquiring a shoe store in the sunbelt. The rationale behind this strategy could be that the East Coast business experiences stronger sales in the fall, while the Sunbelt store thrives during the spring season. By acquiring a store with a different seasonal peak, the buyer can balance its annual sales more effectively.

Understanding the Acquisition Timeline

It's important to note that the acquisition process is not a quick endeavor. It often takes months to finalize a deal, from the initial discussions to the final agreement. This lengthy timeline necessitates careful planning and consideration of various factors:

1. Preparation Phase:

   • Before initiating the acquisition process, it’s crucial for the acquiring business to prepare. This includes conducting thorough market research, identifying potential targets, and establishing a clear acquisition strategy. This preparation should ideally start well before the peak selling seasons to allow for sufficient time to implement necessary changes.

2. Negotiation and Due Diligence:

   • Once a suitable target has been identified, the negotiation phase begins. This involves evaluating the business’s financial health, operational capabilities, and cultural fit. A well-executed due diligence process is essential for uncovering potential risks and ensuring a successful transition.

3. Closing the Deal:

   • After successful negotiations and due diligence, the deal will move to the closing stage. This is where legal documents are finalized, and ownership is transferred. Timing is crucial here; closing the deal at the right moment can facilitate a smoother transition into the new season.

Planning for Future Shipments

One of the key considerations for an acquirer is the impact of the acquisition on future shipments and inventory management. A good shoe store acquirer will want to carefully plan for the pre-buy season well in advance. This involves understanding the upcoming shipment schedules and making necessary adjustments to align with the business’s sales strategies.

1. Adjusting Inventory Orders:

   • If a buyer knows they will be acquiring a store in the spring, they may want to adjust their inventory orders accordingly. This means ensuring that the incoming shipments align with the seasonal demands of the sandal and flip flop business and that the store is well-stocked for the peak selling period.

2. Marketing and Promotions:

   • Timing also plays a critical role in marketing and promotional strategies. An acquirer can leverage the acquisition to launch targeted marketing campaigns that resonate with the local customer base. These efforts should be planned to coincide with the seasonal peaks to maximize impact.

Conclusion

While waiting until the new year to start the acquisition process may seem convenient, it is important to consider the critical role that timing plays in successfully acquiring a business. The alignment of acquisition activities with the seasonal sales cycles of both the acquiring business and the target store can significantly enhance the overall outcome of the deal.

By recognizing the importance of timing and implementing a well-thought-out acquisition strategy, businesses can not only ensure a successful transition but also position themselves for sustained growth and profitability. Whether you're looking to expand your shoe store through acquisition or simply evaluating your options, keep in mind that the right timing can make all the difference in your success.