Having excess capacity in an industry can trigger acquisitions.

Be fearful when others are greedy and greedy when others are fearful. – Warren Buffett

Let’s look at how smart business owners use acquisitions to eliminate excess capacity within their industries. For the sake of example, let’s consider as a scenario a small town with three bakeries. To keep things simple and easy to follow, I will use nice round numbers. Let’s pretend that each of the three bakeries sells $1 million worth of baked goods per year.

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