Selling Opportunities

This CCIM carves his niche by catering to business buyers.

Gaining a foothold in one specialty area can be challenging but rewarding for those brokers who work hard to excel in their particular sector. Commercial Investment Real Estate spoke with Allan S. Reider, CCIM, CBI, GRI, managing broker of the Altus Group in Grand Rapids, Mich., about how he found success in his unique niche of selling business opportunities.

CIRE: Selling business opportunities is an interesting niche. How did you become involved in this sector?

Reider: In 1992, I founded a commercial brokerage, the Signet Group, which is now the Altus Group. Shortly after, word got out to the CCIM community that I had experience selling opportunities, and they began sending me referrals for various types of businesses such as gas stations, restaurants, party stores, and beauty shops. Now we work with more-sophisticated businesses such as manufacturing, distribution, and service businesses.

Within two years, my company sold more business opportunities than commercial real estate. Because of this, I joined the Michigan Business Brokers Association and began networking with other business brokers. These activities encouraged me to achieve my Certified Business Intermediary designation from the International Business Broker Association.

CIRE: Why are qualified buyers leaving the corporate environment to purchase their own businesses?

Reider: Many of these executives have been downsized as their companies have cut expenses or have been acquired by other firms. These highly qualified and motivated people want to control their own destiny and owning a business is the first step.

Approximately half of the buyers we service have come out of the corporate world. We help them determine if buying a business is the proper course of action. Some buyers are comprised of entrepreneurs looking to buy a business. The remainder is corporate buyers acquiring or merging businesses. In addition, Altus Group has constant activity with private equity groups searching to acquire businesses.

CIRE: What types of buyers do you typically represent?

Reider: Our market is driven by supply and demand. Currently food service and manufacturing/distribution industries have generated strong market activity. There are some buyers coming into the marketplace with experience in the food industry who want to own their own business. However, we also have buyers coming out of the corporate manufacturing world looking to open their own business. Most buyers remain in their comfort range when they purchase a business, allowing them to use their experience.

Many of these executives and middle-management buyers are looking for small manufacturing and assembly companies. skilled-labor buyers are looking for something either in their trained field such as tool and die or in the service business such as muffler shops or other franchised business including food service.

Currently new buyers are entering the market as the auto industry offers buyouts for early retirement. This offers these employees sufficient funds to fulfill their dreams of owning their own business.

CIRE: How do you advertise to find potential buyers?

Reider: We advertise in the local newspapers, trade papers, and on Web sites specializing in businesses for sale and/or mergers and acquisitions. These Web sites have national and international exposure with thousands of businesses for sale. Some of the more popular sites are www.bizquest.com, www.bizbuysell.com, and www.ibba.org.

Altus Group also employs direct-mail campaigns and cold calling, and we work with other professionals such as attorneys and accountants to help find solutions for their clients. These clients don’t have family or key employees to take over the business, so we help them develop an exit strategy and work with them for several years to prepare the business for sale.

CIRE: How do you get your name and company out there so that you will get referrals?

Reider: I have been involved with various Michigan professional organizations as a board member or president such as the Michigan CCIM chapter, the Commercial Alliance of Realtors, and the Michigan Association of Realtors.

This form of networking allows me to have constant contact with my fellow CCIMs. I can’t remember the last time I didn’t have a current listing or buyer prospect referred to me by a CCIM. Getting so much business from other designees has paid back the education and membership costs a hundredfold.

CIRE: Can you elaborate on the most recent deal you were involved in?

Reider: Altus Group recently closed a small manufacturer and distributor of after-market products for the automobile and recreation industries. They have a national presence selling through catalogs as well as marketing from their Web site. We mounted a regional campaign and solicited four offers that resulted in a transaction above the asking price. Currently, my company is working on more than 20 assignments representing sellers and buyers.

CIRE: What are your future plans?

Reider: My plans are to continually develop this niche. The baby boomers are just reaching retirement age and many of these business owners do not have an exit strategy. This creates purchase opportunities in the market. The present number of qualified buyers exceeds the quantity of available businesses. As the boom blossoms, the challenge will be to fill these positions with the diminishing number of buyers.