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Selling your company? Three things buyers look for during the mergers and acquisitions process

11 February 2020

Selling your company? Three things buyers look for during the mergers and acquisitions process

When considering selling your company, there are some simple things you can do to increase valuation and generate interest from potential buyers during the mergers and acquisitions process. Jonathan Otis works with language services provider (LSP) owners who are looking to grow their companies through acquisition or perhaps looking to sell their company and move on to the next challenge.

Jonathan Otis, Business Strategy and Growth Consultant

Jonathan has spent the last 25 years as a development executive in the enterprise IT space. Coming to Seattle 20 years ago, Jonathan ran product management, marketing and systems engineering creating and managing products as the company grew from USD 27 million to almost USD 500 million in sales. His focus on integrating new technologies and subsequent work with start-ups and technology partners led him to business and corporate development. Jonathan has closed countless deals with OEM’s like Dell, EMC, HP and IBM, many reseller and alliance contracts and fruitful work managing very large direct customers, some of the largest public cloud companies. He has been instrumental in M&A activity and can’t wait do the same at Nimdzi.

What buyers look for

Hi, I’m Jonathan, and I run the M&A practice here at Nimdzi. Selling a company is a very hard thing to do. Buyers are very picky, they’re very subjective, and knowing what it is that’s gonna be of value to them is often very hard, so you need to be looking at value all over your organization. Buyers can be looking for value in three areas: the value of your customer base, the sales they bring in, the repeatability, the vertical it might be in. They’re gonna be looking at technology. Have you developed anything? Have you developed a process? Have you developed a piece of software? Have you developed something that’s really different, that’s attractive? That’s differentiating? And they’re, of course, gonna be looking at your people. People are super important. You, running a company, you’re relying on them. They’re doing a great job for you, they should be able to a great job through the inquirer. And people are gonna wanna be interested in who they are. Probably the biggest thing people look at is customer. What’s your customer base look like? What kind of revenue are they generating? Are they vertically oriented? Are they geographically in a certain area, or not? This is gonna be super important. Getting customers is difficult, especially in this day and age, so the quality of those customers is good. And you want a lot of them, as many of ’em as you can, you know that already, you wanna spread your risk all over the place. People are gonna be looking at that, focusing on that, getting your sales team focused on that is super important. Another big one is technology. Have you developed anything? Have you developed a process? Have you developed a piece of software? Are you a company that, all you do is develop software? That’s super important because buyers are gonna be looking for something that’s different. Somethin’ that’s differentiated, something that is efficient, something that will bring efficiency to the industry. Something that a lot of people will wanna buy. Developing your own IP is good. We can have a whole discussion about patents, and things like that, some people like that, some people don’t. I certainly believe, if you have something really, really, different, yes, you should patent it, but, if not, they can be a distraction. And distractions are not always good. But technology is probably the thing everyone is looking for the most, because a lot of people have customers, they have ways to get to market, but they want something that’s different, they want something that’s new. So if you’ve got ideas, if you’ve got something you’ve started, or if you’ve got something that you’ve been creating for a long time, that you think is really different, keep focused on that. And the team that develops it can be very important to them, as well. If you have a low-cost development team, somewhere, if you’ve got a super smart group of developers that can put stuff out really fast. Any of those things could be attractive to an inquirer. And lastly, of course, there’s people. You rely on people every day, to grow your company. The inquirer’s gonna need the same thing, he might be looking for people in a certain area. They might want offices in a new country that they’ve never been in before. They might want sales people that are experienced in a certain vertical. So, the development of your people is super important. And I think it’s super important that you don’t stop running your company. If you’re thinking about selling, don’t just focus on that and stop, don’t say, ‘Well, I’m not gonna hire somebody, ‘because I need to sell the company’, or, ‘I’m thinking of selling the company.’ Go ahead, keep running your company every day, do everything you would’ve done to make it successful. That’s gonna be the most important, when an inquirer’s looking at you. They wanna see success, they wanna see continuity, they wanna see growth. That’s not hard to do, these days.

More on mergers and acquisitions from Jonathan Otis and Renato Beninatto.

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