To Attract Strategic Buyers, Tell a Good Story...
September 21, 2012 at 10:38 AM
We recently read an article on M&A that stated that most of the time, companies are bought rather than sold. If someone is buying, isn’t someone selling? Don’t puzzle over that one – here’s what it means.
It is better to have the buyers beat a path to your door than to go out have to beat the bushes for a buyer. And buyers will come to you because they like what they see and they like what they hear – the story of your company. When they see that your story is about the things you have done to enhance value, they will come prepared to bid for your business. Part of preparing for that day, indeed, for making that day happen according to your timetable is learning to tell your story.
Imagine your buyer describing the opportunity to buy your company to his Board of Directors, CPA, attorney or spouse. If you are doing the right things, you will have the opportunity to shape that story, to influence those who will help your buyer make the decision about offer price, timing and terms. Here are 5 ways to launch into your story that will spread the right message and maybe serve as a reminder to you on the important things that should keep your attention:
1) “We are growing at 20% per year…”
Growth is most likely your strategic buyer’s number one objective in buying your company. What’s your growth story? Does it already show in your historical financials, or can you make a solid projection of sales and show evidence that you are on a growth path? Be knowledgeable about the total size of your market, its growth rate, and how you are growing or poised to grow at better than the industry average.
2) “We are currently at $10 million in sales …”
Your current level of sales is important to your buyer. Your buyer will be impressed you have some market share and you’re able to support your level of sales. The strategic buyer is going to invest the same time and resources to a small acquisition as they would to a large one – the bigger you are, the bigger impact you have for them.
3) “We are 24 people who…”
Focus on your people and their core capabilities. Strategic buyers typically want to have a great team in place – people who will provide continuity, who are trustworthy and committed, and who understand the business. The buyer avoids making new hires, keeps his own people doing what they do best, and reduces risk by ensuring the continuation of your success. And it always makes a good impression when an owner gives credit to his people – it assures them that you don’t personally hold all the keys to the company’s success.
4) “Our brand positions us as…"
Strategic buyers are in the position to buy because they have paid attention to building a brand, or because they want to acquire a brand that will add to their market position. Be able to articulate your brand and how it is positioned to compete effectively. Does your brand speak to quality, to low cost, to a strong market focus? Tell it with passion.
5) “We are currently building, developing, investing in…"
These are the words that every strategic buyer wants to hear in your story – that you and your company see into the future. Your company is not winding down or liquidating – it is entering the next phase of its life. David Lawee, VP of Corporate Development at Google, that legendary strategic buyer says it succinctly: “Entrepreneurs who sell to Google are doing it because they have a vision of what they’re trying to do… thinking of it as another stage in the company…”
You have the opportunity every day to give your “elevator speech.” Using these starters in rotation for a few weeks will help you work out the best language to position your company for a high value to buyers. It may also give you a regular reminder of the things you need to be focused on as you build your company.