Many acquirer's want you to have a strong organization they can leverage
Many sellers believe that their future acquirer will just base their purchase valuation on the financial performance of the business. Certainly, the financials and the projections of same will factor into the valuation the acquirer places on your company. But, there are other factors.
In the M&A world, there is an expression that the acquirer is placing their bet on the jockey more than the horse. Meaning, the product or service your company provides is certainly important but what many acquirer’s are drawn to is how strong is the organization, your team, that they could leverage to drive continued solid performance.
Your employee hiring, retention and overall management plans are key to building the organization that could one day help excite an acquirer. So, ask yourself these questions as they relate to having a strong organization:
- Do we have people in key roles that know how to help us get to the next level of performance or could we soon outgrow their education and experience level?
- Do our key managers have educational and experience backgrounds that fit well with the job they do or do we have people in roles they aren’t specifically suited for?
- Does our company have a healthy culture?
- Do we empower employees to make certain decisions on their own
- Do our employees work well together, as a team
- Do we hold people accountable for doing their jobs consistently around our company or are we inconsistent?
- Do we promote from within – are we grooming the future group of key managers?
- Do we have a compensation and reward system that helps drive results?Building the long-term net worth of your business will require multiple pieces of the puzzle to be in place. One is certainly the strength of your product or service and the other is your financial performance and projections. But don’t underestimate your organization and what it will mean to your future acquirer. Start giving more thought today to your team and your culture as time invested in this important area will pay you a dividend many times over in the future.
Building the long-term net worth of your business will require multiple pieces of the puzzle to be in place. One is certainly the strength of your product or service and the other is your financial performance and projections. But don’t underestimate your organization and what it will mean to your future acquirer. Start giving more thought today to your team and your culture as time invested in this important area will pay you a dividend many times over in the future.
