Common M&A Misconception: “I need to launch my next version, then sell”

As you start preparing for the sale of your company, there are myriad things to consider. Is your product unique enough to spark interest with buyers? Can you convey the value that a potential acquisition will bring? Do you, as the CEO, simply have the time for an acquisition? One common mistake I see executives make is the decision to launch a new version of their product before starting the M&A process.

 

 

While it may seem like a good idea to do this — “We can boost our sales and show how innovative we are!” — it can actually be quite detrimental to your M&A efforts.

 

Buyers don’t necessarily value new versions. They value increased revenues and a growing customer base. They know that it takes time for existing customers to adopt a new version and requires additional investment in sales and marketing before a new version generates a bump in sales. The danger is that your new version will actually cause a short-term dip in sales which will impact your valuation.

 

Buyers will also want to make sure that any issues associated with the latest release are addressed well before they get involved. It is not a good idea to go to market if there is a chance that the company’s reputation may be temporarily tarnished by teething issues or when your “latest and greatest” version is now just “late”.

 

Save the roll out of your new version until after you have completed your M&A process. Remember this: there are many buyers who would express more interest if new versions were to be released under their banner.

 

Posted by , Regional Director on 6 June 2017
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