When we talk with entrepreneurs about taking their company into the market they often tell us, “it isn’t the right time...or we’re planning to sell in a few years.” Our experience tells us that these reactions are based on gut feel rather than detailed analysis. Often times, the assumption is made that if you go to market now means that you must sell the company, almost like there’s no turning back. This is not always the case, as major insight can be gained by the process of going to market that can have a significant impact on the business in the short term and a huge impact on the valuation of the business in the longer term.
These are the Top 5 Benefits:
“Outside In" Perspective
If we build it, they will come! This is the most common mistake that we see being made by entrepreneurs who are building their first company and have never been through a M&A process before. Being absolutely passionate about what you have created is an admirable trait, but if that passion begins to blind you from the market value of your business it can be a significant impediment to your success. Stepping back and taking time to evaluate why you are doing what you are doing and how will others perceive the value of your solution or service can be extremely valuable.
We’ve been in your shoes; we get it. Running your company day to day with all the details and stresses frequently keeps you in “the weeds” of the business. It’s hard to take a step back. So, we take our clients through a self-checking due diligence as one of the first steps in preparing to go to market. You’ll get feedback from Corum’s team of leading technologists, entrepreneurs, analysts, and go to market experts. The underpinning of this process comes from one of our publications “Power Planning: How to Structure Your Company for Success.” This is a chance for you to get out of the weeds and look at the company with a 50,000ft view: how is your company functioning, can you be more efficient, are there redundancies, pain points, etc. And, how do you stack up against the market? The clarity that this experience can provide is invaluable. Your roadmap to success will be that much better.
The Elevator Pitch
How do you describe your company in terms of the value of your creation rather than a function and feature lecture?
Understanding and mapping your company to the leading trends that are driving M&A will dramatically change how potential buyers see your company. It’s interesting how dramatically our clients’ understanding of their value proposition changes through this process. During what we call the IPM – the initial presentation meeting – our clients pitch their company to a room full of former tech CEOs, analysts, and tech M&A experts. It really puts you under the microscope...sometimes brutally. The honest feedback that you get from our team can bring about very positive changes. Not only will you understand your positioning better, as we mentioned in point one, but you’ll be better able to articulate it to a room full of buyers, some of whom have absolutely zero background in your space. Remember, it’s about the story. The better crafted your story, the greater the excitement for the future of your company – from a buyer’s perspective, should you decide to sell, and from the perspective of your own team that is helping you build the company towards that vision.
Market Feedback
This will give you insights to help improve your value. You will get first-hand feedback on how others see you and assess your solution’s value. During this process you have progressed from making assumptions about the market from the inside looking out, to have sets of critical eyes form assessments from the outside looking in.
You could pay $1 million to do market research and not get the kind of feedback that you’ll get during this process. The market never lies. Remember that. Sometimes it can be a bit of a reality check, but if the market of willing buyers does not bite, something is not right. You don’t want to know that in 5 years when you are “ready to sell.” It’s too late. No one will want what you’ve built. Imagine marching forward, building your company, without that feedback. You’ll lose years and serious capital only to realize that you built the wrong value. And worse yet, time may be up to make the changes needed to sell.
A business network – lasting relationships
This comes as a surprise to a lot of people, is as you go through the outreach process and interest is generated to learn more about your company and your solution, you open lots of doors, that previously may have been closed to you or in some cases you never knew they were there in the first instance. Sometimes they're not buyers, and that’s okay! They could end up becoming business partners for you. There is one thing that we can all likely agree on – having good people and strong relationships can make or break your business. Engaging in a go to market process will enhance your business, whether you sell or not. And if you do decide to sell, having a strong relationship as a foundation with a potential buyer will seriously play into your favor down the road. Trust matters in M&A. Remember, they are buying the company, the vision, and you. Build these relationships now, not when everything is perfect.
The stars align
There may be buyers out there that are looking for the very solution that your company provides. The only way to catch a fish is to cast your line into the water. You could end up doing a merger sale or a financial recap of your company as what you have completely aligns with what these buyers have been looking for.
Proper preparation prevents poor execution. If you start your preparation early, as we are suggesting, the process will run far more smoothly and the outcome will be far more optimal. Any one of these will justify the time and expense of going through the process.
So, if you’ve been misled into believing that a go to market process can only benefit you if you sell, think again. Think of this process as an opportunity for growth, recalibration, and learning. You’ll come out of this process a better company and a better leader.