Understanding Industry Risk in Business Acquisitions

Industry risk refers to the external factors that may impact a business's performance, even if the internal aspects appear strong. It's crucial for buyers to investigate whether the industry is on an upward or downward trajectory and consider shifts that may affect their investment. For instance, acquiring a business that thrived during the pandemic, like home fitness equipment sales, poses a dilemma if market conditions are changing. By utilizing tools such as industry reports and engaging with industry insiders via social media or networking platforms, buyers can gain valuable insights that traditional due diligence may overlook.