Hit the Mother Lode by Attracting a Buyer of Your Company
Many startup entrepreneurs dream about an exit strategy – launching their business, being acquired and striking it rich. Perhaps you have the same dream.
As an exit strategy, yes, it’s a common occurrence especially in technology. But it isn’t always easy. It helps to understand human nature – the motives of acquirers.
Competitors are especially interested in acquiring a fast track to increase market share.
Some entrepreneurs buy micro companies to accelerate their business prospects. (In my early days as a consultant to get a jumpstart in a new market in which I was unfamiliar, I bought a firm to insure that prospective clients would readily hire me. I told them: “I’m the new president of an excellent five-year- old company with an outstanding record of success.”)
Savvy acquirers are motivated to buy if they get the right answers for their key concerns about building a company vis-à-vis acquiring one. They wonder if they’ll save time and money for potential earnings by buying a business instead of building their own startup.
Emotions can play a part in their decision-making – a fear of being left behind in a competitive marketplace – or a desire to seize an opportunity for growth.
They want to buy a company with tangible and intangible assets, including:
- A great business plan
- Strong financials
- Effective operations/business processes
- Excellent branding
- Cutting-edge technology
- A healthy reputation
- Superb talent and human resources approach Note: Talent is most important.
(For specifics on the seven assets, see: When Should You Develop an Exit Strategy? Now…Here’s How.)
Before you get overwhelmed by the seven assets, not to oversimplify, but start concentrating on these three basic elements:
Talent
Savvy businesspeople know that talent is paramount. Not only companies fear losing their own great talent, but in making acquisitions, they want to acquire great talent.
A lot of sellers have great concepts, but not all have the best team of people. Here are 15 HR strategies to improve your business performance.
Intellectual property
If your concept is proven, your company will be more attractive. Patent protection is vital. (For more, see: Risk Management – Lawyer Explains Basics in Protecting Intellectual Property)
Even if your concept isn’t advanced but has wonderful potential, you might attract buyers who believe by acquiring your firm that they’ll save time and money in going to market.
Market share
For immediacy, many acquisitions occur when a buyer is able to save time and money in expanding into a new sector or region.
Often, buyers make an acquisition because they fear you and your company.
Meantime, lower your expectations of a buyout. Stay focused on your mission to grow a great company. That’s when wonderful surprises occur.
From the Coach’s Corner, by the way, how’s your strategic planning?
It is always wise to look ahead, but difficult to look further than you can see.
-Sir Winston Churchill
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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.
When Should You Develop an Exit Strategy? Now…Here’s How
You should always have an exit strategy in place – no matter what. Whether you’re just starting out or you’re a veteran business owner, you should always have an exit strategy.
Yep. That includes being a new entrepreneur in a weak economy, looking for an angel investor, or trying to plan for a successful turnaround.
Change happens. You might hit a tsunami. You might decide to try a different venture. You might want to retire. You might want to pass the business to your children (it’s a mistake to 0verlook succession planning).
Plus, not to discourage you, but data shows startups often fail. You should plan to create an asset that can be sold as easy as possible.
Here are basic tips to start:
Business plan. It should contain action-strategies for results. Involve all logical employees in planning. Include your key performance indicators – measurements to meet operational and strategic goals – from finance to marketing. That means being strategic in your planning. For additional reading here’s a checklist for success in business planning for the new economy.
Financials. You should have superlative accounting system. Use best practices in financial statements. Be sure to know your break-even point and be embezzlement-proof.
Operational and other business processes. Be well-organized and documented, and constantly evaluate your policies and procedures. Remember that management best-practices include solid operations checklists.
Branding and marketing. Here’s a marketing checklist to measure your brand’s personality. For best results, here are marketing plan essentials. Don’t forget the importance of being tech savvy and content marketing.
Technology. Be prepared to demonstrate your competence in technology. Be current for your industry and streamline as much as possible. Make certain your business is prepared with precautions and response philosophy.
Reputation. Make certain your customers love you and that you use manage your Web reputation. Take steps to be known as socially responsible and to be known as a green company.
Human resources. This is the last tip but quality talent is the most important asset to attract a qualified buyer. Take reasonable steps for excellent employee relationships. If necessary, use proven steps to improve your business performance and power your brand with employee empowerment. Take precautions to make certain your stars don’t become free agents.
Every business is different, but you get the idea. Make certain your business performs at a peak level and keep everything documented. This will insure you receive top dollar if you decide to sell. It goes without saying that you want to be as competitive as possible anyway, right?
From the Coach’s Corner, here are more marketing thoughts:
- The Link between a Simple Logo and Branding Success
- 11 Sales Strategies to Outsell Your Big Competitors
“Affairs are easier of entrance than of exit; and it is but common prudence to see our way out before we venture in.”
-Aesop
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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.