Sometimes you meet a friend through a network event, or a common connection, or though your kids but rarely do you realize you have a new friend through a book!
Branding For Buyout by Ted Schlueter nails one of the realities of private company exits – most owners need help to tell their story, to build a brand that is remarkable and one that will get noticed by acquirers one day. It is sad but as Ted points out most entrepreneurs don’t get what they deserve on exit.
But there is a better way. As Ted outlines in the book: “Through the cases and the analysis that comes with them, I’m going to show you the steps you can take right now to engineer the better exit for yourself. You can take more control over your brand and a potential exit – long before it actually happens. You’ll learn how to show a potential buyer not just what you are today, but what your brand could look like in the future if placed in the right hands.”
What Ted is saying, which I’m totally endorsing, look at your business through the lens of a buyer! I’ve said many times that the best Exit Planning strategy is to scale the actual business using the most appropriate playbooks over many years. Build something buyers will cherish even if you never sell it.
Ted takes us on a journey of exits through significant case studies. BrassRing (Talent Management/Recruitment), Wasabi (Cloud Storage), Sperry (Shoes), Etonic (Sports Shoes), LeadCheck (Lead Paint Detector), Embotics (IT Infrastructure & Development Tools), PopCorners (All-natural corn chips). Through these case studies and more, Ted spells out some insightful lessons to ensure you maximize your exit value:
Lessons
- Look for the human story – How did you discover it was something people wanted? Why should somebody work with you instead of finding someone else? Relate your product to an actual application the prospect could use.
- Ask for second opinions – Asking outsiders you trust what they see – and actually listening to that feedback – are extremely powerful and valuable. Our Saleability Test is a great place to start. Understand where value leakage is occurring. Look at your business through the lens of aa acquirer to reveal priorities worth attacking.
- Outliers are great. As long as there’s a market. – Is the market ready for what you have to offer? Is there a mechanism in place to deliver it? Think hard about those questions, because the wrong answers can be painful.
- Play to your size – Big players have huge resources of course, however if is inherently difficult for a large company to change direction. Be careful not to burden your company with big company processes. In our view at TPP we take a lot of care in designing playbooks that are light and appropriate for the size of the company. Just as effective as a large company’s playbooks but simplified to the very essence of what you need.
- Clean up the house – Licensing agreements, supplier contracts, IP, non-competes, employment contracts need to be up to date and relevant. Buyers love a clean house.
- Build credibility first, and volume later – It’s not always about volume. You could sell lots of a commodity, but your valuation might be low. At TPP we’ve seen volume printers sell for multiples, a fraction of niche, small volume printing businesses servicing the Life Sciences sector.
- Follow the market – Really understand the market. What can you offer that somebody else can’t. Is your competitive value proposition really clear?
- Make the strategic plan – It’s great to have a goal, a north star, a vision of your future state but you need roadmaps to get there. What are the actual playbooks you’re going to produce and follow to reach your projections. Every section of your business has its own playbook.
- Brand the future – tell the story of what you are and what you could be and prove that what you have can get it there. In TPP language we believe in building playbooks and operational excellence initiatives that are designed to get you where you want to be. So, for example a business with revenue of $40m needs to build in scalable processes now, to get to the next level of say $100m. It can’t happen by accident.
- Don’t be afraid of change – be courageous with decision making but gather sufficient data to continually measure success. Key performance indicators are vital. Decide which indicators actually measure your success. You can measure everything these days, but you will get paralyzed. Curate what you measure and understand the reasons for the performance. What’s the story?
I think you’ll love this book even if you never want to sell your business because everyone wants to tell a better story!
The Portfolio Partnership is a fractional senior management team of operators. We help owners “build businesses buyers love to buy” by deploying our successful playbooks. We seamlessly join your team to work on the right stuff.
As always if you found these insights useful, please share.
Ian@TPPBoston.com
