Best industries to acquire a company in?

March 17, 2025
by a searcher from University of Toronto - Joseph L. Rotman School of Management in Toronto, ON, Canada
I'm looking to broaden my search, and I want to start from a place of understanding various industries better (e.g. industry forward looking growth rate, risk of AI threat // AI opportunity, etc.).
Does this type of research exist? I have my own thoughts, but I don't know what I don't know, and would love to hear other perspectives (esp. if backed by data).
from London School of Economics and Political Science, University of London in London, UK
For example, whilst something like a food ingredients distribution business (e.g. supplying bulk volumes of flour and cheese to pizza restaurants) may be able to demonstrate a large book of contracted and highly recurring clients, that is likely to be a 3%-7% EBITDA margin business, and will never be more than that, due to the limited level of value-add in moving cheese from one place to another.
In contrast something like servicing and repair of medical equipment, would require more technical know-how, specialist input of skills and processes, and therefore would derive higher margins, whilst still having the ability to have diversified customers and long term contracts,
So in short you want a research process along the lines of: Broader industry characteristics first - the Jamestown Capital post above is a very good example of this. Then follow with specific sub-sector / business characteristics.
General important point I would probably also say is, better to be doing the research and building your own conviction / theses on certain areas than just being told by others what is good or not...e.g. very easy to follow the current hot trend of B2B SaaS due to obvious margins and recurring ARR, but does not mean it is necessarily the best business for yourself to buy.
from University of Pretoria in Johannesburg, South Africa