A member of the Acquisition Lab recently found himself looking seriously at a copy-machine business.

This was a guy with a technology background. He’d built a startup that went through Y Combinator, had a massive exit, and knew how to scale technology. A copy-machine company was about as far from his expected search profile as you could imagine.

He almost couldn’t believe he was considering it.

Then he looked beneath the product. He saw the systems supporting the company, where they could be improved, and what would need to happen to create growth. Suddenly, he was excited.

The copy machines themselves hadn’t become more interesting. The opportunity had.

 

 

That distinction matters because buyers often begin a search by asking which industries they’re passionate about. I understand the instinct. Buying a company is a major commitment, and nobody wants to spend the next decade trapped in a business they find unbearable.

The problem is that passion can make a buyer feel more certain without making the opportunity any better.

 

When Passion Starts Making Decisions for You

A friend of mine who has started a lot of companies once described this perfectly. We were having beers, probably at an Entrepreneurs’ Organization event, when he asked whether I’d ever started a business with sparkles in my eyes.

You love the idea. You put together a team. You put money into it. You keep pushing because you care so much about making it work.

The business keeps resisting.

Eventually, all that passion gets worn down by the economics. The thing you couldn’t wait to build becomes the thing you hate dealing with. Customers still won’t buy often enough, the margins still don’t work, or the cost of acquiring revenue keeps consuming the revenue itself.

Then the opposite happens. You see an opportunity that seems fairly ordinary. A couple of pieces fit together, so you decide to try it. The business starts producing results, and suddenly you’re fascinated by it.

As my friend put it, “Oh, man, I’m so passionate about that now.”

 

 

I’ve seen versions of this across startups and acquisitions. Passion often follows traction because traction gives an operator something to work with. You can study what’s producing the result, invest behind it, tighten the operation, and watch your decisions compound.

The interviewer I was speaking with described a similar conversation with her business partner. They were evaluating a company and wondering whether they cared enough about the subject matter. Her partner saw a different question.

The seller was strong at producing content and weaker at sales. The buyers understood sales and knew how to tighten operations. They believed they could double the company, then potentially double it again.

Their advantage had very little to do with loving the industry. It came from recognizing a business that needed their specific abilities.

She used a good word for the danger of passion: dazzled.

A buyer dazzled by a company can become an advocate for the deal before finishing the evaluation. Every weakness starts sounding temporary. Every projection feels achievable. The buyer’s enthusiasm quietly becomes part of the investment case.

I’d rather see a buyer become energized by a clear value-creation opportunity.

 

Start With What You Bring to the Table

When I spent years talking with brokers and other people helping buyers find businesses, I kept feeling that their questions were pointed in the wrong direction.

They’d ask what industries I liked, then send companies they thought I’d find interesting. The process treated industry preference as the primary filter, even though industry was only one part of the business model and one part of the buyer’s fit.

A better search starts with the buyer. What do you bring to the table?

Consider someone who has spent 20 years running manufacturing operations. She understands throughput, scheduling, labor utilization, quality control, inventory, and where margin disappears on a factory floor. She’s spent her career as the second-in-command and is ready to own something.

Her ideal acquisition may be a manufacturer with established demand and loose operations. Perhaps the departing owner personally oversees production and hasn’t built much management depth. Maybe the company’s scheduling is chaotic, purchasing is reactive, or jobs routinely move through the plant with little visibility into their true profitability.

Those problems would scare away plenty of buyers.

For her, they may be the reason to keep looking.

 

 

She can walk into the facility and see opportunities that another buyer wouldn’t recognize until months after closing. She knows which issues are fixable, which improvements will meet resistance, and which apparent inefficiencies are actually necessary to serve the customer. Her operating experience gives her a more accurate view of both the upside and the work required to capture it.

That’s buyer-company fit.

It also changes how I think about a company’s weaknesses. A weakness should be evaluated partly in relation to the person acquiring it. A disorganized operation means one thing to a manufacturing specialist and something very different to a gifted salesperson who has never managed production.

The same company can be a strong acquisition for one buyer and a miserable one for another.

 

Look for the Shell That Complements You

I sometimes describe the target company as a shell that complements the buyer.

The company already has a business model, customers, employees, vendor relationships, operating history, and a position in its market. The buyer brings a new set of capabilities, constraints, relationships, and priorities.

On the first day under new ownership, that exact company has never existed before.

This is easy to underestimate during due diligence because the financial statements all belong to the seller’s version of the business. The revenue reflects the seller’s commercial ability. The margins reflect the seller’s operating decisions. The organization reflects the roles the seller chose to keep, delegate, or ignore.

A buyer should respect that history without assuming it defines the company’s future form.

That’s why I’d move beyond “Do I love this industry?” and work through a more useful set of questions:

• What am I unusually good at?
• Which of those abilities will transfer into this company?
• What does the business need from its next owner?
• Can I see specifically how I would create value?
• Do I want to spend my time doing that work?
• Are the existing economics strong enough to support the improvements I see?

That last question keeps opportunity from becoming fantasy. A buyer’s abilities can improve a good business. They don’t automatically rescue weak demand, broken unit economics, or a company whose cash flow disappears once the seller leaves.

The business still has to work.

 

 

When it does, the right buyer may see possibilities that the broader market misses. The Y Combinator entrepreneur saw them in copy machines. The manufacturing operator may see them in a plant with sloppy processes. A strong commercial leader may see them in a technically excellent company that has relied on referrals for 25 years.

You can fall in love with the systems, the processes, and the opportunity. You can become deeply interested in the act of making a durable company better.

Sometimes the best business to buy is the one that needs exactly what you already know how to do.

That’s one of the lenses we help buyers develop inside Acquisition Lab before a seemingly ordinary company gives them a very specific reason to pay attention.