How To Catch the Biggest Fish
Whether you have just started to explore selling your company or if you’ve been preparing to sell for a while, it is likely that you’ve daydreamed about catching the really big fish… a large buyer who will swoop in and instantly see the value in your business model and won’t balk at your asking price.
“Luck is a matter of preparation meeting opportunity.” Lucius Annaeus Seneca
You won’t catch the big fish if you aren’t ready to. The sellers who “luck” into deals with large acquirers were able to take advantage of that opportunity because they knew the type of buyers they were targeting, they knew what those buyers look for in an acquisition, and they were prepared to fit that profile.
Identify your big fish
In your daydreams, who is your biggest fish? To choose your dream target buyers consider your industry, geographical region, differentiators, customer base, and other M&A activity that has occurred in your space. Think big. Once you have a long list of fish, narrow it down to your top three dream targets. Now learn about them – where are they, what purchases have they made in the past, and what seems to motivate them? If you were actually fishing, you wouldn’t guess about where to go. You’d know the type of fish you wanted to catch, where they are, and a little bit about them.
Know what they are looking for
You can’t catch a fish if you don’t know what they want to eat. In general, most buyers want to see four things:
1. Long term dedication/experience – That may mean an established track record in the industry, an experienced management team, a proven product, or all of the above.
2. Past growth – Buyers want a business that has shown growth, both from a profit standpoint and a business evolution standpoint
3. Future growth – Along those same lines, a buyer wants to purchase a business with growth potential, supported by accurate projections and marketplace assessment
4. Buyer ready – Sellers earn bonus points by being ready to sell. A big part of that is completing your due diligence in advance. The smoother and quicker you can make the diligence process, the more likely you’ll be to close a transaction under your original terms.
Be what they are looking for
It is one thing for you to have the right bait for the right fish. It is another thing for that fish to find the bait. Now that you know who your ideal buyers are and what they want, you need to communicate that you have what they need. Start with an evaluation of all of your external communications. If a potential buyer stumbles on to your website, will your business look like a good acquisition for them?
If you have questions on how to net the biggest fish to acquire or recapitalize your business, please contact us for a confidential discussion.