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Looking to exit?

Posted by Marc Carnes on Mar 14, 2017

There’s no denying it has been a tough couple of years in Alberta. And while there are some market indicators that give us reason to have cautious optimism heading further into 2017, some business owners are taking a long, hard look at the future of their businesses.

A similar hard look happened after the market crash of 2008, when we witnessed a resulting shift in business leadership in this province. For some, the day-to-day management of family-held businesses was transferred to the next generation as the prospect of rebuilding a business, and the time and energy required to do so didn’t mesh well with retirement plans. For others, it was time to get the wheels in motion and sell. The lure of more time putting on the golf course, playing with the grandkids, or flying away on those exotic dreamt-of vacations–all put off for so many years in the pursuit of passion and profit—was too great.

As we look forward with cautious anticipation to the return of the prosperous market in Alberta, albeit one that is likely to look quite different than what we’re used to, we are beginning to see an increase in M&A deal-flow across the province. So for those considering an exit in the near future, how can marketing help you to maximize the value of your company? 

  1. For starters, reputation is everything. When it comes to establishing a value for your business, know that your reputation - your brand - is material. A fantastic brand is more than just a logo—it is how your company presents itself to the market. It’s how you look; it’s how you talk about yourself; it’s the culture you create; it’s the service you provide; and it’s the credibility you leverage from the quality of products you sell. All of which, are functions of marketing. We’ve seen this in the consumer space, where companies like Lululemon and Canada Goose have attracted a higher degree of appetite from buyers because they are well-known, highly desired, and highly trusted brands. Everyone wants a piece of a winner.

The same thing applies in the business-to-business space. Actively marketing your business and making it well-known for what you are capable of, helps attract investors. For example, a polished website and corporate materials that clearly articulate who you are, what you do, and where you come from, speaks volumes about your professionalism and scale of business. It’s an indicator that you have processes and business practices throughout the rest of the company, which in turn, instills confidence in investors.

Ultimately, the winning scenario when looking to sell is one with multiple bidders. It’s like selling a home: the more bids you entertain, the more value you are going to extract from your property. To maximize the value of your business, you need to be repeatedly and consistently going to market with a strong value proposition so people take notice of your company. Employing a marketing program that builds your reputation, increases your reach into the market, and drives up your brand equity, is essential to attracting those multiple bids.  

This leads us to the second point …  

  1. Strategic marketing and business development plans* are important assets as they provide essential insight into your company’s future business earnings projections. Having a battle-tested plan with a good understanding of what tools and tactics work best for you to increase your corporate profile and profit margins can help potential investors and buyers gain confidence in your business. 
  1. In the case of a company where the founder is looking to exit, one of the greatest value-enhancers is for the individual to make themselves redundant. If they can minimize “key-person risk” by removing themselves from the top chair and the business doesn’t suffer, buyers and investors will have a greater degree of comfort in the viability of the business beyond the founder’s personality behind it. To build the right team for succession, this might include a strong HR and recruitment marketing strategy to make sure you are hiring the right people in those key roles for the short and long-term. 
  1. High-performing staff and strong company culture can add value to the sale, although not directly. The challenge here is that every company thinks it has the best staff and is an employer of choice, but there isn’t a simple means of evaluating those things against competing companies. Investment in ongoing professional development and training is a time-tested way of creating an engaged and high-performing team. Where you can also add value, is by putting some thought into how you can preserve and enhance your culture, therefore enabling a buyer to capture some of that value. Strategic and deliberate internal marketing and communications efforts play a key role in fostering that culture, especially during a time of transition.

When preparing for sale, take every opportunity to realize the full value of your tangible, and intangible, assets. Your company and your staff will benefit, and your pocketbook will thank you.

This post was co-written by:

Marc Carnes
Senior Associate
Incite

and

Mark McRae
Senior Vice President
Sequeira Partners Inc.

 

* A strategic marketing plan will focus on three key areas within your business:

  • Position: How you stand out by offering compelling and differentiated value. By focusing on what you do well, what your customers actually need or care about, and what’s different from your competitors, will help you stand out in a crowded marketplace. If you understand your addressable market and the role that you play within that market, it greatly enhances a broker’s ability to demonstrate how your company can grow its market share. In short, if you don’t understand your own market, how is a buyer supposed to? And, what are they paying for?
  • Experience: A brand is made up of an infinite number of customer experiences that, when managed correctly, help you to build trust with your customers at every interaction. Whether it’s physical or digital assets, or the kind of customer service you provide right down to how you answer the phone, these interactions all serve to articulate and reinforce your position in the market.
Marc Carnes

Senior Associate

Marc uses his unique cultural perspective, his experience in marketing, and his appreciation for the power of relationships to offer Incite’s clients innovative and exciting marketing opportunities.


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