Acquiring Troubled Companies In Today's Economy

SAN DIEGO--(Business Wire)--
In a receding economy, well-managed companies have an opportunity
to capitalize on the weaknesses of their competitors, according to
Vistage International speaker Ed Freiermuth.

During a recession, most companies struggle to deal with shrinking
revenues. But those with a sound balance sheet, strong cash flow, and
the ability to plan beyond the downturn can do more than just survive;
they can grab assets and market share by acquiring weak competitors.

"An economic downturn provides a great opportunity to buy assets,
customer lists, and inventories from struggling companies," says
Freiermuth. "Now is the time to identify direct competitors who might
be vulnerable. Don't buy anything yet because valuations are still too
high. But several months down the road, companies will start dying on
the vine. When that happens, move in and acquire assets on the cheap."

To identify potential acquisition candidates, Freiermuth
recommends the following:

-- Study the financial condition of your competitors. Public
companies have to file SEC reports, which contain a wealth of
information and are available to the general public. You can
also get information via Web sites such as www.freeedgar.com.
For private companies, you can obtain varying amounts of
information from Dun & Bradstreet reports.

-- Compare competitor information to industry statistics. Many
companies use the "Robert Morris Annual Statement Studies" to
benchmark their performance against their industry as a whole.
Use this information to track how well your competitors are
faring.

-- Find out which competitors are accepting business you turn
away. Companies in dire straits often accept risky business
because they have no other choice. Pay close attention to
competitors that you know are taking on unprofitable business.

-- Conduct your own research. At trade shows and conventions,
talk to your counterparts in competing companies. Ask
questions such as, "How's your business doing? How's your bank
treating you? Are you having difficulty getting supplies?"
When companies get in trouble, says Freiermuth, CEOs blame
their bankers.

-- Talk to your suppliers and customers. They know who is doing
well and who isn't, and will tell you if you ask.

"Gather information from as many sources as you can," advises
Freiermuth. "Pay close attention to the early warning signals so you
know which companies to pursue."

Vistage International
Lois Arbogast, 858-509-5861

Copyright Business Wire 2008