Buying a Suppliers's Company Branching out into a new realm of business by buying the assets of a former supplier has its pros and cons. Just ask these entrepreneurs.

Entrepreneur Tom Amoruso is used to working with suppliers as the founder of Shelving Concepts, a Houston company that sells storage shelving and had $1.7 million in 2005 sales. But as Amoruso is learning, buying one of your suppliers is another matter altogether.

Last July, Amoruso, 46, acquired the assets of manufacturer Dixie Shelving along with another former supplier, Dura Rack, at auction for $100,000. He bought the company names, phone and fax numbers, website addresses, and Dixie Shelving's equipment. He purchased Dura Rack's name for potential future use, but not its equipment. "I would always tease [Dixie Shelving's owners] and say, 'If you're ever interested in selling, I'd be the guy to buy,'" says Amoruso, who's delving into manu-facturing for the first time because he sees wide growth opportunities. "Dixie Shelving had a really good name, and I intend to make it even better," he says.

At least 250,000 businesses are sold every year, and 82 percent of them are small businesses, according to BusinessBroker.net. "There's a lot more [M&A] activity this year than there's been in recent years," says Chris Trimble, co-author of Ten Rules for Strategic Innovators--From Idea to Execution and a professor at the Tuck School of Business at Dartmouth in Hanover, New Hampshire. Many companies "are no longer acquiring to achieve scale and reduce costs; they're acquiring to build a better future."