For many startups (and even established businesses), a strategic acquisition represents the ultimate goal. It’s the light at the end of the tunnel – years of hard work paying off in a major liquidity event. But big-money company sales don’t just happen; positioning a company for acquisition is a years-long process filled with both opportunities and pitfalls.
Why trust our advice on this? Simple – we’ve done this a lot. We’ve been in business about 15 years, and in that time we’ve helped more than a dozen B2B companies realize their exit goals. That includes sales to industry heavyweights, smaller strategic mergers, and flips from founder ownership to private equity.
With that in mind, here are five lessons we’ve learned about how to go about positioning a company for acquisition.
1. Specialization Helps Drive Acquisition
Too many business-to-business companies think the best way to drive value and interest is to be all things to all people. That’s wrong. When your value proposition revolves around “solving any problem clients have,” you’re essentially saying that you’re a jack of all trades … and master of none.
When you’re considering marketing your company for acquisition, your first thought should be where in particular you drive the most value. What are you masterful at? What can you do that nobody else can? That’s your lane.
Here’s an example:
A few years back, we started working with a software integrator in Princeton, New Jersey. They were chock full of talented developers and consultants, and they were serving clients in the general business world, financial services, life sciences, and a bunch of other verticals. They were doing well, sure, but “doing well” is a recipe for a lifestyle business – not an exit.
Then they found their lane.
Princeton is a hotbed of big pharma, and our client was fantastic at leveraging enterprise content management solutions in the space. So they specialized, and worked hard at becoming known as the resource for ECM work in life sciences. Flash forward a few years, and they closed on an acquisition by a massive software vendor to serve as the global practice leader for the industry.
2. Pay Attention to Potential Buyers
It’s easy for entrepreneurs to become laser-focused on internal factors once they start preparations for an exit. This is important, sure, but it’s not everything.
As you’re marketing your company for acquisition, don’t forget that getting bought requires there to be a buyer.
In your case, who could that be? Is it a current strategic or ecosystem partner? A competitor? A capital group?
Think about what they want to see. An ecosystem provider is going to be looking for you to be positioned around their platform. A competitor will probably not love combative, gloves-off marketing. A capital group will want to see potential clearly manifested in your brand and messaging.
The lesson: Get your house in order, but make sure that the end product is attractive to your potential dance partners.
3. What Are You Really Selling?
When you’re selling your company, you’re not really selling your company. You’re selling one or more constituent parts of your company.
Think long and hard about what makes you valuable, and consider how you can highlight that in your messaging, brand and marketplace positioning.
Will your value come from your tech? Put your CTO front and center and make sure your documentation and knowledge base are up to snuff. Will a buyer want your book of business? Get those logos and stats on the homepage! Will they be buying the brains and expertise of company leaders? Focus on turning them into thought leaders with smart content creation and promotion.
4. Focus on Processes
A lack of codified processes and documentation is death for a company’s valuation and acquisition prospects. Even the most talented marketing team isn’t going to be able to help if a liquidity event is the goal and all there is to sell is a few key individuals’ IP.
Imagine if you and your top three employees disappeared tomorrow. How long would your business keep running? A week? A month? If the answer isn’t “pretty much forever,” you’ve got some work to do.
One way to drive repeatable processes into an organization is by forcing senior leadership to take periodic sabbaticals, ideally outside the country. (That’s what we do at Altitude.) This temporary separation helps ensure that critical points and methodologies are effectively documented – something that helps both today and in the future.
5. Make Sure You Look the Part
The biggest part of positioning a company for acquisition is what we call “putting on your big boy pants.” If you’re looking for an exit, you’re looking to be valued like a leader. But are you perceived as a leader?
Don’t forget to pay attention to:
- Your website. Is it crisp, clear and reflective of your specialization, your most valuable assets and what buyers want to see?
- Your collateral. Is everything clearly part of one consistent family? Are you using the same logos, color scheme and styling everywhere? Small mistakes in printed materials stick out like sore thumbs.
- Your proposals and invoices. These are easy to forget, since they’re typically handled by AR, rather than marketing. That makes them Petri dishes for inconsistencies and poor branding. Make sure they’re up to snuff.
- Your trade show presence. Especially in the world of B2B, making a splash at a key show is a great way to rapidly raise visibility and interest. It might be worth shooting the moon with a big booth and a fancy party; when you’re talking about M&A, it’s go big or go home.
- Your social media accounts. Is your Facebook fallow? Your Twitter tired? Your Google+ … extant? Either get them up to par or get rid of them – that Facebook feed last updated in 2015 is not the way to look the part.
Conclusion: Positioning Your Company for Acquisition
If this seems like a lot … it should. Selling a company is no small thing, and it’s not a quick process. Assume following the steps we laid out above will take at least six months, and probably closer to two years. But if you do it right, your marketing efforts can help you lay the groundwork for a fruitful exit – and hopefully a new profitable venture in the near future.