Tuck In Versus New Sales Personnel
A client, through no fault of its own, recently lost a customer who represented annual sales in excess of $1mm. Over a three to four month period I had significant discussions with the client concerning the best method to be utilized to replace the lost revenue. The client’s existing sales force was seasoned and really was not what you would call “Hunters.” They were comfortable with their customer base and level of income, therefore, the chances of replacing the lost business with the present sales force was remote. The two avenues being considered were seeking out a company in a geographical area close to the client for a “Tuck In” or hiring new sales personnel.
The client had the financial resources to support a “Tuck In” for the size that was contemplated. However, he was used to the more conventional method of seeking new business, hiring sales people. I countered that in today’s market, with sales Non-Competes and the difficulty of finding an effective sales person willing to make a move, it would be a long process. I suggested that he should consider doing both.
Wouldn’t you know it, along came a salesperson without a Non-Compete who felt he could bring at least $400K of new business. The client put the “Tuck In” on hold, hired the new salesperson, and is anxiously awaiting some positive results.
A “Tuck In” typically takes four to six months to identify candidates and bring one to a close, and another six months to sort out the issues that arise in an acquisition. But at the end of twelve months the lost revenues and hopefully additional revenues should be in house.
I believe that the client should have pursued both avenues, only time will tell. I am certainly hoping for the client’s success and will be available down the road if and when he decides to seek a “Tuck In” again. If you want to chat, give me a call at 201-523-6326 or e-mail me at firstname.lastname@example.org.