Megatrend Five: Suppliers are becoming increasingly conflicted in one key area
This megatrend trend could adversely affect your personal wealth unless you get informed on the facts and take appropriate action
The relationship between you as a practice owner and your key contact at your major lens supplier probably runs deep. After all, they are 100% on your side; it’s a symbiotic relationship and the fates of your two businesses are intertwined. Your success is their success.
Except this is not actually the case towards the later stages of your ownership journey.
When it comes to exit planning and the sale of your practice, the objectives between you and your lens supplier quickly diverge:
• You want to achieve the best possible price and deal terms for what often amounts to a lifetime’s
• Your lens supplier wants to ensure that your business transfers to a party who will continue to buy
This is why many are increasingly offering exit planning services and assistance (such as funding) in an effort to steer you towards particular courses of action and certain buyers under the guise of doing you a favour and “saving” you money on broker’s fees.
The problem is that if you don’t have the benefit of sufficient competition from buyers from the whole market – your choices and negotiating leverage are severely diminished. So they may save you paying a brokers fee – but clearly this is something of false economy if you also end up missing out on the best price and deal terms for your practice – for example the opportunity to sell your practice for a significant premium to a strategic buyer. To put this in context, Myers La Roche have recently become belatedly involved in 2 separate deals where the owners were close to agreeing a price after exclusively talking to one party. An uplift of £90,000 in the deal agreed was achieved in the first instance and c£150,000 in the second. Our fee was a small fraction of the increased value achieved and clearly the owners had no qualms in paying it, knowing the very significant benefit they had gained.
As business owners, we have to keep making decisions . Business is not an exact science. There are numerous variables and so many of them (the broader economic situation, government policy etc.) are outside of our control. As Covid-19 has demonstrated, nothing is guaranteed and even with the best plans in the world, we can quickly be blown of course. But we can certainly improve the success of our decision making by getting informed and making more educated decisions – and thinking carefully about whom we take advice from.
Predicting the future is a dangerous game & the Covid-19 pandemic continues to be an incredibly tough challenge for us all
Q1 of 2021 is likely to be the toughest period of the pandemic yet, but after every winter comes spring then summer.
There is therefore a final [6th] Megatrend – a bonus megatrend to hold on to during these taxing times: