Richard Wilson: buying distribution before more product companies
In Richard's hypothetical widget example, a buyer considered acquiring distribution channels before buying more companies making the product.
The alternative acquisition served the existing niche
He described a company selling products from many widget makers through Amazon and a separate direct-to-consumer website. Those channels would serve the same product niche the family already understood.
The later acquisition had somewhere to sell
Richard then described explaining that distribution access to another product company during a valuation discussion. His example concerns the sequence of acquisitions and the operating contribution behind the buyer's proposal. It is a hypothetical mechanism, without a promise about revenue or the price a seller would accept.
In Richard C. Wilson's words
"we help you strategically buy that Amazon company and that widgets .com direct to consumer website" (Richard C. Wilson, How to Start a Family Office mini-series)
How to use this
- Identify the distribution problem behind a proposed acquisition.
- Distinguish acquiring another producer from acquiring a channel that could serve several producers.
Questions and answers
What did Richard put ahead of more product acquisitions?
An Amazon distribution business and a direct-to-consumer website in the same niche.
How did that connect to a later negotiation?
The buyer could explain how its channels might help the product company sell.