Obtaining Maximum Value for Your Company in Today’s M&A Market
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joint ventures, or any other arrangement that could potentially lock other interested parties out of a potential deal or force an acquirer to be locked into business with a competitor.
· Make sure your company’s overall strategy is aligned. This means your acquisition criteria are shared—and agreed on—by key members of management, the board, and investors. A lack of alignment can distract your company from building value, and it can be seen as a weakness by potential acquirers. It’s easy for values to shift during transaction negotiations, so having core fundamentals is key to maintaining solidarity.
· Make sure you have the best management team possible in place. Your company’s leadership is more important than ever. And many acquisitions are now being carried out as a way for acquirers to bring on thought leaders or a great management team. Retention of that great management team will likely be an important component of any transaction’s negotiations. This requires planning and forethought with incentive plans and equity structures long before the transaction is realized.
· Understand the metrics that will best demonstrate your company’s value proposition. Many acquisitions focus solely on profitability or revenue growth, but other core trends—such as showing a strong ability to monetize a historically free product or service—let an acquirer know that the product or service has real value to customers. Understand how to demonstrate the value in your pitch.
· Don’t let a possible or pending transaction consume your business and management. Again, focus on building value in your prime area of expertise, and when a transaction possibility becomes active, ensure that your management team remains focused. Transactions generally take longer and are more complicated than originally estimated, and this can distract management for an extended period of time.
· Be bought, not sold. As a seller, you can gain a better deal by positioning your company in such a way that an acquirer can’t pass you up. The best marketing is to demonstrate value and threaten your segment’s ecosystem with innovation so that acquirers need your business to stay competitive as part of their long-term strategy.
There’s no simple way to maximize value as a seller in today’s uneasy marketplace. But by adhering to fundamentals, companies seeking liquidity can achieve many, if not all, of their goals.