Planning the Sale of Business
Planning the exit should start with the start of business. This article puts forward a variety of thought-provoking ideas which business owners should be thinking about.
Much of this idea centers around the fact that a large percentage of startups end in acquisitions. In particular, it is notable that in 2017, mergers and acquisitions accounted for 93% of the 809 ventures capital-backed exits, producing a total of $45.6B in disclosed exit value. Not too surprising, according to a recent survey of Silicon Valley Bank, over 50 percent of all startups are hoping for an acquisition.
For this reason, entrepreneurs should be thinking about who may potentially acquire them from day one. Especially, startups will want to build their companies in a way that they will be attractive for acquisition at a later date.
Making the startup attractive for acquisition means thinking about such details as the Ideal Employee Profile, Ideal Customer Profile, and Ideal Buyer Profile. It will help startups to build the most attractive acquisition-friendly company possible. Furthermore, exit opportunities frequently present themselves well before a company’s Series B funding.
Startups must understand who their customer is and why a particular product is attractive to that customer. Similarly, having right kind of employees with right kind of training is the key. Hiring the best talent is a way for a startup to make itself more attractive for a potential future acquisition.
Once you understand your customer and have a proper team to support your vision, you will want to focus on companies that can be interested and find an optimal buyer pool. Finding this buyer pool means finding companies that serve similar markets. Then making sure that your business model and your product, both address the overlooked needs of existing customer base. Combining all of these factors together, your company will be much more attractive for an acquisition.
Another key point is that startups should provide products or services that buyers are not providing to their customers currently. Furthermore, disruptors should find out businesses that are actually driven by innovation-perhaps those that have already partnered with innovative labs or accelerators.
Finally, it is important for startups to understand where they could fit within a larger organization. Understanding it will help business-owners make their company much more acquisition friendly.
Ready to sell? Contact CBC Business Brokers Sydney today on 1300 661 498 for a free strategy session.
CBC Business Brokers Sydney
Level 34, AMP Centre,
50 Bridge St,
Sydney NSW 2000
T: 1300 661 498