When someone thinks about your business, what comes to mind? Of course, you want to be thought of in a good way and that’s especially important when you want to go to market. It’s crucial that you position your business in the best possible light because 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 of the key ingredients in your secret sauce that can help sell your business to strategic buyers. Your brand holds 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 space. That’s something that shouldn’t be underestimated. It’s one of the intangible assets that creates value for buyers.
In my own experience with strategic acquisition, brand recognition is less about the company brand and more about the product or service’s brand. While you want to showcase your company’s integrity and reputation, brand recognition is often fixed on the product. A strategic buyer won’t necessarily know about a product or service unless it’s called the same thing as the company. In my opinion, the names need to match to be the most effective.
Part of creating a positive brand is having an effective marketing strategy, your company’s value needs to be clearly and consistently communicated. 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 It’s time to take down notifications about events that happened five years ago or out-of-date product information. You should also have an active social media presence and take part in industry-specific events. Your marketing needs to show buyers 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 identify your current customers and show that you have low churn, a growing customer base, and a strong loyalty to your brand, shows you have defendable long-term recurring revenue. You need to take advantage of this fact and play up all your strengths. Remember, your company is the product you’re selling here, so pay attention to any gaps in the business and fix them before you go to market. As you do this, you’re actually strengthening your brand, improving your business, and making it more valuable to a strategic buyer.
Another important way you can ensure your brand is strong when it comes time to sell is to avoid making any 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 you go to sell isn’t the right thing to do, so don’t put out a new product or change your business model just before going to market. I know a lot of people think they’re going to see new hockey stick growth, but it’s actually a risky proposition, it’s hard to monetize something new, and usually takes more time and resources than you think. If you are looking to go to market in the next six 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 a better to wait a while before going to the M&A market in order to give yourself time to get ready, prove that your new product or service has verifiable market acceptance.
Here are my top three key takeaways about marketing your business to strategic buyers:
- Understand strategics are buying future outcomes. You must have command over your future pipeline and be able to defend your forward-looking projections. And you do this by showing proof from the past.
- Get professional help early so you understand what strategics are looking for and to also have an informed perspective of your company and what it looks like to an outsider. That comes from getting help from someone who thinks about M&A strategically every day.
- It’s never too early to prepare to sell. You need to do your internal due diligence long before you actually go to market. Take the time now to refresh your business and marketing plan, get your financial projections ready, and prepare an investor presentation.