Santa Monica Seafood President and CEO Roger O’Brien spends a lot of his time exploring potential acquisitions. Lately, it feels like he’s got more company, he said in an interview with SeafoodSource.
“My impression is that more people are looking to acquire than have been before,” he said. “The last three years, there have been a lot of deals, and that means there are less deals to do.”
Credit is still reasonably-priced, but financial prognosticators are predicting that won’t be the case for long, O’Brien said.
“My impression is that people are looking at the financial market, which is not skyrocketing but is stable, and they’re thinking eventually it will go a lot higher, so they’ve got to do the deals now while the cost of money is still attractive,” O’Brien said.
The pressure to get deals done is high, but O’Brien said he has still walked away from a couple of deals recently.
“I take a hard look at how difficult it’s going to be to change them to make them a more profitable company. Many owners of small seafood businesses think their brand is more valuable than it is, or they don’t have a quality financial person to be able show them clearly that their company is not as valuable as they think it is,” O’Brien said. “I prefer dealing with an intelligent, reasonable, fair broker because I would rather have that broker explain to his or her client, ‘Here’s what your company is really worth, here are the multiples out there, and here are the risks associated with your company. So help me explain why your asking price is so much higher.’”
In general, when evaluating a company for potential acquisition, O’Brien evaluates its management team, systems, processes, capacity, food safety standards, growth opportunities and business ethics.
“The biggest thing is getting the right people. There’s strategy and many other issues involved, but the people are the key,” he said. “But there’s always a push and pull. If you’re not doing deals in some way, shape, or form, you’re moving backwards.”
