Aug 27, 2018 10:20:46 AM
As we went through the process of selecting a buyer when we sold Marco in 2015, I knew it would be the most important decision we ever made.
Of course, the obvious part was having a partner that would continue our history of client satisfaction. We also wanted to retain the unique culture that we worked so hard to build. Part of that culture was creating career opportunities for our employees and continued support of our commitment to being a good corporate citizen.
Through this process, we learned that not all buyers are the same. Settling on price is actually the easy part. The more difficult decision is determining the right fit.
So how do you choose? Here are a few key considerations:
- How will they take care of your employees?
This is the most common question we get asked when making an acquisition. Discussions may start with agreements and opportunities for key employees, but it also should extend to creating good career paths for all your team members. Marco is a high-growth IT company that happens to be in the copier business. Growth companies in the IT services space provide a way better career path for your employees than riding out the trend of the copier industry.
- What is their commitment to client satisfaction?
Most sellers want to be assured that the buyer is going to take good care of their customers. Every buyer is going to claim that their organization provides good client satisfaction; however, I don’t believe most buyers can actually prove it. This might be a good opportunity to ask them about their process and how they validate their claim.
- What is the company known for?
Take the time to learn about the company’s personality and internal motivations. Do your homework. Check out their website and social media to get a feel for the company’s brand and culture. Ask around – including vendors, peers and other trusted advisors in the industry – to evaluate their reputation. Take a tour of their corporate headquarters. In my experience, that speaks volumes. The company’s brand impacts its ability to attract and retain both employees and customers in the future.
- What is their track record?
There are plenty of buyers in today’s market. Consider what their experience is in completing and integrating acquisitions. Being able to put a fair deal together, in a timely manner, builds trust and confidence in the future team. One of the most important aspects of a successful transition is the integration of people, systems and processes. This is where most acquisitions fail. It might be a good idea to talk to some of the companies that the buyer previously acquired to get a feel for their experience.
- Do you want cash now?
Knowing how you will get paid for your business is important. Many times, deals come with earn outs, deferred compensation or maybe even future promises on
re-investments. I’ve found that owners typically like cash at the time of sale.
- What’s their strategy to remain relevant in the industry?
You’ve built a business, and even after the sale, your legacy can live on and continue to bring value to the marketplace. It’s clear the copier industry is going to need to transition to IT services to remain relevant long-term. Validate that the buyer has expertise and a track record for transitioning your business.
- What role do you want to play, if any?
We’ve found two-thirds of owners are ready to leave when selling their company. Others choose to take a role, typically in sales or service leadership, or serve as a consultant during a transition period. Know the role that you want to play and communicate it to your prospective buyer upfront.
You’ve worked hard to build and grow your business. Determining your transition plan may be the most important decision you ever make. Take the time to evaluate the buyers and choose the one that allows you to leave the legacy you desire.
I’ve been on this journey with dozens of owners over the years. I will gladly share what we’ve learned and help you determine what might be the best fit for you and your business.