I play water polo – after a fashion. It’s great to get out into the sun at the start of the season into cold water and wrestle with other wet, fat middle aged guys in speedos for half an hour or so. More fun is sitting in the pub after the game, gently teasing the opponents, sprouting political theories and watching the rugby.
So after the first match the season, I happened to listen in on somebody talking about how he had found a wonderful business where the owner puts on his overalls every day, and gets dirty on the factory floor with his workers. “And you know, because he is there, the product comes out perfectly every time. You just don’t see businesses like that anymore.”
What he was describing, is actually not a business at all. It is a job, where the owner is helped out by some guys who it seems, may be incompetent without the owner kicking butt on a regular basis.
Now there may well be a market to sell such a business to a like minded individual, but heck, that market is small, and shrinking every year. That sort of business needs an artisan to own it. Somebody else who enjoys working with his hands, and doesn’t trust his workers to get on with the job because they are badly trained, disciplined or incentivised.
With small demand, hard work expectations and jobs, rather than real businesses, come poor prices. Typically, the business can only be sold in an asset deal, and not in a much more beneficial-to-seller, equity deal. Similar buyers are always going to be around, looking for those kind of deals as they too, seek to become masters of their own destiny. But they are never going to have sufficient funds available to create a demand which drives the selling price into something really beneficial to the seller.