When someone thinks about your business, what comes to mind? Of course, you want to be thought positively and even more so when you want to take your business to market. It is critical that your business is positioned in the best possible light since strategic buyers will be looking at your company in a very specific way – they want to know what makes you special. In other words, what’s your secret sauce?
Your brand is one key ingredient in your secret sauce that can help sell your business to strategic buyers. Your brand holds real value and equity — you’ve worked hard to create a clear position in your customers’ minds and you’ve risen above the competition to find your own space in the market. Your market position shouldn’t be underestimated. It’s one of the intangible assets that creates intrinsic value for buyers.
In my own experience with strategic acquisition, brand recognition is less about the company overall but more about the product or service’s brand that your company produces. While it is important to showcase your company’s integrity and reputation, brand recognition from a consumer perspective is most often fixed on the product or service. However, a strategic buyer won’t necessarily know about a product or service unless it’s named after the company. In my opinion, the most effective way to capture both consumers and buyers is for the names to match.
Part of building a positive brand is executing an effective marketing strategy so your company’s value can be clearly and consistently communicated with the public. This means your website needs to be updated frequently with interesting and informative content. It’s time to take down notifications about events that happened five years ago or out-of-date product information, they suggest a business that is not detail oriented. You should also have an active social media presence and engage in industry-specific events when possible. Your marketing should articulate to buyers that you are current, innovative, and valuable.
It’s also important to step back and see your company as an outsider would from an M & A perspective. An outsider cares about your business model — that is the crux of it, and the most advantageous business models for attracting M & A interest are replicable revenue streams. This could come in the form of recurring revenue subscriptions, such as a tech company’s Software as a Service (SaaS), or annually recurring multi-year service contracts. Being able to accurately identify your current customers and show that you have low churn, a growing customer base, and a strong loyalty to your brand, makes it clear that you have defendable long-term recurring revenue. Remember, your company is the product you’re selling here, so identifying any gaps in the business and fixing them before you go to market is crucial. As you audit yourself, you’re actually strengthening your brand, improving your business, and adding value to a strategic buyer.
Another way you to ensure your brand is strong when you are looking to sell is to avoid any fundamental last-minute changes to the business. From an M & A perspective, a buyer is going to look at the past 12-24 months of your business to sustain confidence around the forward-looking pipeline. Changing your trajectory right before attempting to sell can lead to confusion and more questions for a buyer that you may not want to answer Bottom line, don’t put out a new product or change your business model before going to market. If you are looking to go to sell in the next 6 to 12 months, perfect what you have been doing and make sure a case can be made that it’s repeatable going forward. It may be advantageous to wait before going to the M&A market in order to give yourself time to prepare and prove that any new product or service you introduce has verifiable market acceptance.
Here are my top three takeaways about marketing your business to strategic buyers:
- Understand strategic buyers are focused on future outcomes. You must have command over your future pipeline and be able to defend your forward-looking projections. Clearly showing proof from the past is the best and most effective way to do this.
- Get professional help early so you better understand what strategic buyers are looking for and gain an informed perspective of your company from an experienced outsider. That knowledge comes from experts in this space who think about M&A strategically every day.
- It’s never too early to make preparations to sell. It is important to do your internal due diligence long before you actually expect to go to market. Take the time now to refresh your business and marketing plan, get your financial projections ready, and prepare an investor presentation – they can always be updated when the time to go to market is right.