by Valter Pontes – Founder and CEO of Valter Pontes Consulting
If you’ve been investing in property for a number of years, you’ve probably noticed that the market never stands still.
Interest rates change. Lending changes. Regulations change. Strategies evolve.
The investors who continue to perform well are not necessarily the ones with the biggest portfolios. They are usually the ones who continue learning, adapt to changing markets and recognise opportunities before they become obvious to everyone else.
Property has created incredible wealth for investors over the last few decades, and it is likely to continue doing so for many years to come.
At the same time, another opportunity is emerging that more property investors should understand: business acquisitions.
For anyone unfamiliar with the concept, a business acquisition simply means buying an existing business rather than starting one from scratch. Instead of spending years finding customers, building systems, recruiting a team and establishing a reputation, you’re acquiring a business where many of those foundations already exist.
One of the greatest investment opportunities of the next decade is already unfolding. It’s being driven by one of the largest generational transfers of business ownership we have ever seen.
Across the UK and many other parts of the world, hundreds of thousands of business owners are approaching retirement. Many have spent decades building profitable businesses with loyal customers, experienced teams and strong reputations. The challenge is that many don’t have a clear succession plan in place, creating a significant opportunity for the next generation of investors.
For investors, this creates opportunities to acquire established businesses and continue building on what has already been created. And just like with property, banks can fund these acquisitions.
Imagine acquiring a business that has been trading successfully for 30 years.
It already has customers.
It already has experienced staff.
It already has suppliers.
It already has systems.
It’s already profitable.
It already has a proven track record.
Instead of spending years building those foundations yourself, your role becomes understanding the business and identifying opportunities to continue growing what has already been built.
If these business owners, who have been running these businesses for decades, do not find suitable buyers for these businesses, they will need to close them down.
These businesses are too small for institutions like Venture Capitalists and Private Equity, but they could be great cash-flowing assets for some investors.
Why Property Investors Are Well Positioned for Business Acquisitions
- Property Investing Doesn’t Just Build a Portfolio. It Builds an Investor.
Most property investors do not realise, but throughout their investment careers, they become very good at finding value and opportunities that other people miss.
They have developed skills that are transferable to other types of investments.
When you do something for so long – you don’t even recognise these are skills.
But these are transferable skills that can be applied to business acquisitions as well.
For example, you might have become very good at building relationships.
You might have become very good at putting yourself in other people’s shoes and understanding their circumstances and what they want to achieve.
You might have become very good at managing people.
You might have built a reputation over the years that people trust you and know that your word means something.
All of these skills are very valuable for business acquisitions. - The Investment Principles Don’t Change
Many property investors assume buying a business requires a completely different skill set.
Of course, buying a business introduces some new areas to understand.
However, the principles of property and business acquisitions are very similar.
The same as in property, you need to find the business.
After you find the business,
Your legal and accounting team will do the due diligence.
Then you will do the funding. For those who like to use banks, the banks will finance the business in a similar way they finance property.
And after funding the deal, if in case the business does not have a General Manager, you will find someone within the business who can become the General Manager (normally it is the person who covers the owner when the owner goes on holiday) or you hire a manager to carry on managing the business. - Business Acquisitions Can Strengthen Your Property Strategy
One of the biggest lessons in investing is understanding that different assets perform different roles.
Property can provide long-term appreciation, rental income and tangible assets.
A well-run business can generate recurring cash flow and provide capital that may be reinvested into future opportunities, including property.
It’s not about choosing one over the other.
It’s about understanding how different assets can work together as part of a long-term investment strategy.
Property investing has always rewarded investors who recognise value before everyone else does.
Business acquisitions are another example of that.
Not because they replace property, but because they allow investors to apply the same principles that have always built successful portfolios.
Those principles don’t change.
The opportunities do.
That’s why investors who continue learning, continue adapting and continue recognising opportunities early will always put themselves in the strongest position for long-term success.
About the Author
Valter Pontes is the Founder and CEO of Valter Pontes Consulting. He has won more than 15 business and property awards, serves as a Judge at the Property Investors Awards, and has built businesses and property investments across multiple countries. To learn more, visit www.valterpontes.com.
