There are a number of different ways that somebody can do acquisitions by buying low:

1. Buying at the lower point of the market. Unlike the difficulties of perhaps trying to tie in a stock market purchase, the acquisition market works on a longer cycle. And while you can’t necessarily hit it right at a low point, you can get some sense on where things are on the curve.

2. Distress companies. A company that isn’t doing quite so well can be bought at a lower price with the expectation that you’ll be able to turn it around and get it back up to par with that it could do in the industry.

3. Smaller companies. Size does matter in all things being equal on relative profitability. Smaller companies will go at a discount versus the larger companies. That’s one way to add value is to be buying small and then rolling them up into a larger mass of companies which can then go for a higher value.

4. Special circumstances. There may be other special circumstances that can trigger lower price in the market for a particular company such as personal issues affecting the owner.

5. Orphans. A company might be a good company however it’s an orphan in either it’s corporate or parent portfolio or perhaps in the investor or bank portfolio. It doesn’t fit and that party is willing to unload it at a relatively discounted price.

One of the best things that can help ensure success in an acquisition is to buy at a good price. Be creative and consider the range of possibilities on how you can make it happen. Like putting together a group of companies at the lower price, you could acquire your way into a very attractive company or add some nice critical mass to your existing operation.