Leveraging your data will enable your narrative to help sell your company
A common challenge many owners have is when the day comes they try to sell their business, they deliver a message, or narrative, that describes their company to the acquirer only to then find their company internal performance data isn’t available to back up that message. We often reference the great quote, “in God we trust, all others need to bring data”.
Here is an example of a common business exit narrative delivered by private owners/CEOs: “Our business is a growing market leader with a loyal customer base and a strong product/service portfolio that has us positioned to drive future strong, profitable growth.”
On the surface, this could be a good narrative but does your data back up this narrative because your acquirer will ask the following questions:
- What data can you show us that reinforces that your business is growing year over year? Do you have lumpy year over year growth or does your data show a consistently growing business over the last 3 years at a minimum?
- What data are you basing your reference to being a market leader on? Is this based on industry data that is readily available, 3rd party market studies that have been conducted or just your team’s opinion?
- What data can you present that shows your customer loyalty? Are you able to show things like your top 10 customers 3 years ago remain top customers today (very little customer attrition) or can you show data that shows customers repeat purchases over time?
- What data or specifics can you show that you’ve been investing in building your portfolio of products/services so the acquirer sees the effort and resources you’ve put in to this key aspect of your business? Does your data show that you have continued to invest in your portfolio?
- What data can you show that supports your forward-looking growth outlook? Are you projecting a hockey stick of growth with little backup data/specifics as to the basis of this growth or can you show effective levels of detail and backup data that show your growth outlook is realistic?
- What data can you show that your portfolio of products/services is profitable across the board? Acquirers will initially be impressed with your consolidated profit performance but they will want to see the specific data related to the details of each product/service within your portfolio so they understand how each performs.
The bottom line here is years prior to thinking about selling your business, you will want to think about what your ultimate desired exit narrative will be in presenting your business to potential acquirers. As you think about this narrative, plan for how you need to lead your business to deliver, track and ultimately be able to report the specific supporting metrics and data that will effectively reinforce your message. Acquirers will want to see good history of data which is why you want to start thinking about this now and use time as your friend in preparing to one day experience a euphoric exit event based on receiving a great company valuation.
