To Sell Or Not To Sell? That Is the Question

By Julie Bos
Is now the right time to sell my lab? Should I hold out another few years? What will happen to my current customers and staff? Is there a second-generation of family or staff that is willing — and able — to continue the business? Is selling now a wise decision or a fatal mistake?

As large lens manufacturers continue their current acquisition strategies, more and more independent laboratories are faced with tough questions about the future of their businesses.

If you’re currently entertaining an offer or are simply doing some long-term, strategic planning for your company, there’s a lot to weigh on both sides of the decision. To help clarify some of the advantages, we’ve talked to several labs that have provided insights into the decision.

Advantages of Remaining Independent

SRX Optical Lab in Houston, Texas, is one independent lab that has been approached over the years to sell. Founded 18 years ago, this family-owned lab now has 24 employees — and some compelling reasons for their stance on acquisition. “We have been approached in roundabout ways several times over the years, but we never wanted to sell the business,” explained Matt Thomas, vice president. “We wanted the freedom to be our own bosses and maintain ownership over our laboratory.”

“Plus, it was very important to us to maintain our current level of hands-on customer service and personal touch — and our customers really appreciate that,” he added. “We — and our customers — like knowing they can pick up the phone and speak directly to the owners of company, if necessary, and can even see the owners of the company the same day. Our customers know that they can call me and talk to me anytime they want. That’s not necessarily possible with other companies.”

In fact, Thomas attributes part of the lab’s success to this high level of accessibility.

“We get notes from customers almost every week saying they really appreciate our service,” Thomas said. “Some people joke about when we’ll ever be bought out, and we tell them ‘never.’ The offer would have to be out of this world — unrealistically high. I’ve got another 30 years in this business, at least.”

For Thomas, it all boils down to the service, the accessibility, flexibility and the freedom to run the business the way he sees fit.

“Plus, when you sell to another company, it’s hard not to lose some of the ‘heart’ of the business — the reason you’ve been working so hard over the years. When you open your own business, you essentially open up a piece of yourself to serve others. If you get bought out, you may lose part of that personal investment in the company,” said Thomas.

Balester Optical, Wilkes-Barre, Pennsylvania

Another company who has been approached several times over the years is Balester Optical, in Wilkes-Barre, Pennsylvania, and so far, this company has decided against selling.

“One of the major things driving our commitment to remain independent is the fact that most of us are entrepreneurs, and entrepreneurs like having a level of control that enables us to react more quickly to market changes than vertically-integrated labs,” explained Dale Parmenteri, Balester Optical’s vice president. “We also have more control over the decision-making process, as there are fewer players in management.” According to Parmenteri, there are a lot of factors that come into play — especially for family-owned labs.

“It’s not always a bottom-line consideration,” he said. “Many labs stay independent because they have family in the business and their goal is to provide a living for family members and employees — not necessarily to bank a lot of money, have a huge stock value or to be shopped publicly.

“On the other hand, many labs decide to sell because the principal owners are aging, they don’t really have anybody to pass the business down to, and can use the sale as a way to retire.”

Advantages of Selling

On the other side of the coin, some labs welcome sales proposals from lens manufacturers, and their reasons for doing so are equally diverse.

In addition to changing family circumstances, labs may also choose to sell because of declining market conditions — or even a business’ own recent success.

“Being very successful and having a good profit run during the past four or five years may lead to a sales offer that is just too good to refuse,” said Parmentari. “The bottom line is we’re still business people and we have to make sure that all our stockholders get the best return on their investment.”

Paul Zito, president of Encore Optics, LLC, in South Windsor, Connecticut, has experience on both sides of the decision. After selling his previous lab in 1999, he opened a new independent lab four years later and continues to operate it today.

“For labs who have planned all along to build, then sell their businesses, achieving this feat is realizing the American dream,” said Zito. “Labs today are facing uncertainty in the market and many are working increasingly harder to maintain their regular business. In these cases, selling the laboratory could be the logical next step. Not only is there a financial gain, labs also gain a certain measure of security in an uncertain market.”

Another advantage of selling is the chance to adopt a new business model.

“Selling the lab to a large manufacturer gives owners a very clear game plan for their labs and eliminates their need to make daily decisions,” said Zito. “Every day, labs are making marketing, purchasing and human resources decisions. After a sale, [to a lens manufacturer] most of those decisions go away. It definitely simplifies an owner’s life.”

Owners who want to keep working can also choose to remain with the corporate organization and pursue a different career path. Many times, second-generation family members have a chance to flourish in these environments — and they can apply their college training and advanced management skills to a larger organization.

“Obviously there’s more business risk when you’re independent, but I believe it also offers more excitement,” explained Zito. “It’s more fun and we get to make more decisions about what products to promote.”

“I think it comes down to the fact that some people simply prefer getting up in the morning to run their own business,” he said. “They feel like they can be flexible in the products they sell and make a real difference to their customers.”

When it comes to making a decision about selling (or not selling) a laboratory, the list of compelling reasons on either side seem to be as individual as the labs themselves.


Labtalk June 2020