Want to get your business acquired for millions, or maybe even billions of dollars?
What can you do as a startup founder and business owner to get your company acquired? What steps and strategies will help to achieve an attractive exit?
Whether you are still in the initial idea phase and are planning your exit in advance, or you’ve hit a ceiling and are ready to cash out and hand the baton on to someone else, these factors can help a lot.
Create That Buzz
Generating more buzz around your brand and even just your company and team can be one of the most powerful and valuable things you can do.
Big companies can lose that edginess quickly. We’ve seen it with Facebook, and then their acquisition of Instagram. It can help them stay relevant if they acquire you, and will certainly help you get noticed and stay visible.
Publishing content is one of the best ways to achieve this. Founders with very notable exits credit a lot of their success to even just a single blog post or online article.
Pick the Right Board Members
Putting the right investors on your board can make all the difference in an exit. More than just bringing expertise and money to the table, they can make the right connections to secure your exit.
They have a vested interest in making that happen. Look at the other startups they are invested in, previous exits and relationships with active acquirers, as well as the big corporations which are most likely to be interested in buying your startup.
Build to Solve the Weaknesses of Larger Companies
The serial entrepreneurs who seem to be best at consistently launching and selling ventures for big sums, are those who start out building a solution that solves weaknesses of larger players in their space.
That may be a productivity feature or efficiency enhancement needed to remain competitive, or as Harvard Business Review suggests, a product or service which helps complete the customer journey. What can you do faster, more efficiently and better than they can?
Layout a Roadmap for Them
Potential buyers aren’t going to make you and offer if they can’t see the value and how compatible your ventures is. If you are serious about selling, you may have to help them see that path and vision.
This is especially true if you haven’t even completed your product, gained traction or become profitable yet.
Layout a roadmap of where this acquisition can take your company, the products, the integration and how your foundational assets will create value for an acquirer.
In this regard, potential buyers will most likely request your acquisition memorandum which gathers all the relevant information. For a winning acquisition memorandum take a look at my recent commentary providing a step by step guide where you could learn how to put yours together (see it here).
Create a Bidding War
Competition helps to create interest, adds motivation, increases what companies are willing to pay and makes offers stickier.
Once you get some interest, be quick to shop your deal around and multiply it into as many potential buyers as you can.
Hire a Banker or Broker
M&A experts specialize in building interest, value and excitement, and gaining momentum in selling your business.
They can also prove invaluable in negotiating some of the finer points. Leverage their time and knowledge, so that you can stay focused on what you do best, while achieving a larger exit.
You also want to remove yourself from discussions around price. The reason behind this is that you want to always stay on the good side. Bankers could play the role of bad cops which ultimately helps with increasing the overall outcome of the deal.
Seek the Right Type of Acquirers
While there are some exceptions, getting acquired is typically a process that requires meeting, getting to know and developing a relationship with key dealmakers. That’s going to mean a lot of wasted time and resources if you aren’t spending it with the right players.
As a CEO you have an obligation to get the most out of what you’ve got, and no one has time to waste. There are two main types of possible buyers of businesses.
The first type are the strategic acquirers who are looking to add something to their existing business. For example, product, growth, revenues, profitability, efficiency, or new demographics.
Then there are the financial buyers who are purely buying your business to add a money making investment to their portfolio of companies.
Strategic buyers have been known to make acquisitions of startups without revenues, and sometimes without a finished product and honed business model.
Financial buyers on the other hand, are looking for proven cash flow and returns.
Make Yourself Dispensable
This might seem counterintuitive, but your company needs to be able to run without you if you are going to pass it onto someone else, and for it to work for them. This is the difference between being a freelancer or being stuck as a small business, and a startup which is acquirable.
The better your business runs without you, the more high level work you can do while you own it, and perhaps the less time a buyer will want to lock you in to working for them after the merger.
Work Your Plan B, Like it’s Your Plan A
Your main goal right now may be to get this company sold. Yet, that may be much more likely to happen, and at the best possible price, if you clearly have other options, and don’t need to sell. As a founder you need to be unattached to the outcome.
If you can, bootstrap and get profitable with real revenues. You can always raise money if you have a proven business that can produce consistent cash flow and returns.
Or you can get out there and start raising a big round of funding to take your startup to the next level on your own. That can give potential buyers more motivation to move faster, and up their offer.
Or perhaps you can begin going down the path of an IPO.[“source=forbes”]