Too many small-business people aren’t willing to ask for help when they need it. Entrepreneurs by nature tend to be independent risk-takers. They started the company and it is their baby. Obviously, they should know how to develop it.
To sell a company you will need to find good buyers. Mid Market businesses usually sell to other businesses and they need to find their buyers through a Direct Contact process. This method is distinctly different from businesses sold through our brokerage division where buyers are found through online advertising.
Research is the backbone of M&A
If you look at our research page you will see 2 videos from IBM about their system called ‘Watson’. The first video explains how M&A can use it to find target companies. The second video explains how it works, and how it is a totally new concept in computing. Artificial Intelligence is definitely on its way.
Until then, we still have to rely on older research techniques. They are just as accurate but definitely slower than ‘Watson’. M&A is all about matching two parties together where there is the desire to benefit from a purchase. To find that desire needs research. We need to establish the opportunity within the seller and we also need to find companies that will benefit from that opportunity.
Sellers are often too close to their business to see what is happening there, let alone being able to spot hidden opportunities. We also need to see how those opportunities could relate to companies that do not realise the impact such an opportunity might have on their existing business. The insight and process is quite complex.
Finding Opportunities in Sellers
Most companies offer many opportunities, most obviously their clients and their people. There are also many financial opportunities, such as economy of scale savings. You don’t need two admin departments, two creative departments or two sales departments. It depends on the company, but savings are always there in the background. The best deals, though, are all about creating more business.
What would happen if two companies in the same sector got together? The client base would expand – even double – for both of them. Perhaps one company might be more advanced in its online sales so the other one could shortcut lengthy development and achieve an instant increase in their own online sales. People working in any business are always familiar with their own opportunities, but they often cannot relate those opportunities to potential buyers.
Jeannette Bitz, chief strategist and managing principal at Engage, says: “As a business owner, I’m focused and motivated, but I don’t always make time for strategic thinking because I’m busy serving clients.”
Finding Buyers who just might be excited by what an opportunity might bring
Then we need to find potential buyers who could benefit from what a seller has to offer. To find those potential buyers takes research. We look for companies operating in the sectors we consider most likely to benefit from that opportunity.
Cross border buyers are always a serious consideration, although each company must be analysed. We can use several filters such as financial size and resources. Analysing what the companies actually do needs research, usually online. We enter details into a spreadsheet and compare them. Those details can include companies’ key people – who they are, their age and their strengths within the business.
Research can only go so far. At some stage we need to make contact and talk. After the initial contact stage, the filters reduce the number of target companies. We usually aim for about 200 potential acquirers to start with—
Being an entrepreneur is one of those few jobs where your path is not charted out for you. No one cares about your past experience, no one will hold your hand when things get difficult and no one will sugar coat their belief in your potential failure.
If you’ve ever met someone who told you they were a “business consultant,” and you scratched your head wondering what in the heck does that really mean, you are not alone. The term “consultant” is so vague it often borders on euphemistic.
To survive as a consultant in any industry, you need to charge fees that will enable you to stay in business; at the same time, both you and your clients need to feel that your fees are fair and equitable. So how do you find the middle ground that seems fair to everyone involved?
In sports, we often talk about athletes who “want it” more than others. These are the players who show up early, who use up every last ounce of energy in pursuit of their best performance. Players for whom defeat is viscerally painful, the ones who will stop at nothing to succeed.
Teamwork is critical to building a successful business. Successful entrepreneurs engage a brain trust of mentors and advisors who coach them for free, and they develop strategic partnerships with individuals and businesses.