Perhaps I’m stating the
obvious, but one thing that I’ve noticed over the years (and have talked about
extensively, particularly with Brad who very much shares this view) is that it’s
much easier to have a company get bought than it is to sell a company.
Getting bought means that
someone comes to you. Selling means you
go to them. The former results in a more
motivated buyer, an easier (and faster) process for rounding up competitive
bids and a higher price. The latter is a
pain in the ass, tends to result in fewer options and generally a lower
purchase price. When you are getting
bought, you by definition have other options (since you don’t necessarily need
to sell); when you are selling you are signaling to the market that you’ve made
up your mind (whether you’re “exploring your strategic options” or more
directly “have decided to sell the business to take advantage of . . . “).
So position yourself to be
bought rather than to sell. Yes,
sometimes this isn’t possible (otherwise all of our businesses would get bought),
but I think companies think too late in the game about their exit and as a result
end up as sellers. An ongoing
conversation at companies should be the list of possible buyers and the right
ways to get close to them. Striking “strategic
deals” or OEM relationships should be at the top of the list (we’ve had several
very nice ‘getting bought’ experiences with significant OEM partners – they understand
the business and the fit and can more easily take advantage of owning the company/technology).
If those aren’t options, still work at
getting into a conversation (competitive or otherwise) with people that might
be buyers of your business.
See my other posts from this series:
M&A Part I - Lines in the sand
M&A Part II - A few thoughts on negotiating skills
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