Nick Brown, founder of Corporate Exit, sold his company Northern Profile in 2004 for a seven figure sum. In a series of monthly columns he will be giving North East Times readers crucial advice on how to plan their exit, just like he did.
In my last column I advised you to focus on putting your business in the ‘shop window’. In this month’s column I am going to mentor you on ‘knowing who you want to sell your company to’.
The first thing to flag up is that selling your company doesn’t just happen. It takes careful planning, often over many years. I built my business up over ten years and sold it for a seven figure sum.
Quite often a suitor will be a larger rival organisation. So how do you build your business so you can sell it in the future?
The answer is remarkably obvious: “Know who you want to sell to”. It is that simple. Acquisitive CEOs will only want to buy your business if it adds value to their company, is complementary to their own service or product and helps expansion into an existing or new market or territory that they can capitalise on.
For example, those of you that run a North East-based headquartered business with little presence in the south would be advised to build your business with a view to selling it to a rival business in the south. In many cases, acquisitions are geographical, be it international or national.
Vodafone and Sage, for example, have built fantastic businesses on the back of strategic international M&A activity. Locally,the recent acquisition of Newcastle-based Storey Sons & Parker is a classic example. The purchaser of Storey’s was a predominantly southern-based commercial property business that wanted to get a foothold in the north and create a national business.
If, on the other hand, you run a North East-based business that relies less on geography and has more of a standalone product or service then, again, focus on the kind of business that will want to buy your company in the future. I know you will be reading this and now saying, ‘Of course. How obvious. I know who would be interested in my company. Why didn’t I think of that before?’
In fact, you would be amazed at how many business owners I have met who are so wrapped up in the day to day running of their companies that they have forgotten about the end game of selling their businesses. Don’t make the same mistake.
My advice to you is very simple. Start drawing up a list of companies that you feel you would like to be acquired by in the future.Planning is the key to a successful company sale. Many businesses fail to attract a suitor because they haven’t thought through what kind of company is likely to buy them in the end.
It is likely that your wish list will sit in your filing cabinet for a good few years whilst you build your business, its profits and credibility but by “knowing who you want to sell to” will make your company the perfect fit for a rival when the time is right.
In summary, my message to you in this month’s column is: “Make sure that it is your business that is acquired and that you get that life changing cheque rather than someone else”. You can achieve all of this by planning the sale of your company.
Check out the next installment on ‘How to sell my business’ in my exclusive monthly North East Times column in July.
Nick Brown is managing director of Corporate Exit. Email: firstname.lastname@example.org ; web:www.corporateexit.com