Most
business owners of privately held companies see mergers and acquisitions as a
one-way street. They only seek out mergers and acquisitions options when they
are ready to sell their company. In truth, mergers and acquisitions can provide
a number of innovative options to expand a business to new heights without
selling the company in its entirety.
Owners
who are innovative and flexible may be surprised how willing buyers are to
craft a transaction that meets the seller’s goals and objectives. Most buyers
also value the seller’s contributions to the company and prefer that owners
continue to play a role in the organization after a deal closes. After all, the
business owner built the company into the successful operation that attracted
the buyer in the first place. They need the expertise and connections the
business owner has cultivated over time in order to continue growing the
company.
Not long
ago, we worked with a mobile telecom company and helped the owner sell 88
franchise stores. The seller wasn’t looking to cut ties with his business.
While he desired some liquidity to enjoy life, he also had plans for the
company and wanted to remain involved in its future. During the negotiations,
his innovation allowed him to buy back 40 percent of the company. A win-win for
him – both a substantial financial windfall and a major shareholding in the
company. Most importantly, he was able to continue doing what he loved most,
which was work with the new owners to grow the company.
To
foster the same success, here are three questions you need to ask yourself
before a potential mergers and acquisitions:
1. What are your personal and professional
objectives?
Be
creative. Think about what you want your company to look like three, five and
ten years from now. Be honest. Do you want or need to be involved in the
company to accomplish this objective?
In
tandem, think about your personal life three, five and ten years from now. Does
it include more time with family? Is health an issue? How much money do you
need to live the lifestyle you want to enjoy? Do you need to sell part or all
of the company to reach these personal goals?
Write
down your answers and determine if your current plan will enable you to reach
your objectives.
2. What do you do best?
When you
launched your business, you did it all. What did you do then that you enjoyed
most? It is probably what you do best. Maybe it is selling, or designing new
products and services. Whatever it may be, identify what part of your business
you enjoy most and do well, and determine if it’s what you would like to
continue to do after the mergers and acquisitions transaction is completed.
Investors
will need your expertise and your experience to continue growing the company.
However, you and your investors will probably be able to grow the company
faster if your contributions reside in the areas where you feel most
comfortable doing what you enjoy most.
Imagine
how exciting it could be to take some cash off the table now, spend the next
few years of your career doing exactly what you enjoyed the most about your
business, while you help your company reach new heights. It can happen.
3. Who do you think would be your perfect investor?
Today,
approximately $1.1 trillion dollars are available from investment sources.
There are literally thousands of investment firms, banks and family funds that
you could consider. Business owners are in the driver’s seat in today’s market.
Before you begin the mergers and acquisitions process, envision the perfect
investor, their qualities and contributions, and how they can help you meet
your personal and professional objectives.
Is price
the most important thing to you? How important is it to you to play a role in
the company after the deal is done? How has the investor treated long-time
employees in prior transactions? What types of investments have they engaged in
previously? Are they a long-term investor, or a firm that is looking to flip
the company for a profit? There are literally hundreds of questions you should
ask yourself to create a description of the perfect investor for you and your
company.
When you
meet with an investment banker it is important to share this
information with them so they understand your goals. The more specific you can
be, the easier it will be for your banker to identify investors who can meet
your goals and allow you to live the life you want after the deal is done. The
key to getting what you want out of an mergers and acquisitions transaction is
to have a clear picture regarding what you want to achieve personally and
professionally. If you can identify your goals, establish what you do best and
enjoy most, and describe the perfect investor, you are well on your way to a
healthy mergers and acquisitions experience
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