If I could transfer one skill – one special little slice of aptitude and instinct to every business owner client I have, I think the first thing I would want to give them is a “nose” for value opportunity. All too often, owners don’t even want to glance sideways to think about selling value, until something particularly connected to their personal circumstances says they need to think about it. They wait for their own perception of the right age for retirement, or their family circumstances, or other internal personal factors to dictate their timing. However, all of those factors have virtually nothing to do with market opportunity. The owner who thinks about the possibility of sale at the right moment – on the heels of the right opportunity indicator, will often achieve a value selling price of 50% higher, simply because, as a result of his timing, he cruises on that natural downhill slope of excited competitive drive for his business.
So – what are the indicators of potential great timing for business value?
1. When someone strategically close or adjacent to your business approaches you about potential partnership or perhaps about consideration of a joint venture – it may be the perfect clue to a shifting or broadening of the business category you’re in – and thus indicative of powerful opportunity.
It may be a company that sells a different product or service to the same customers you serve. They approach you with the notion of cross-sale of one another’s products to the two similar but varied customer bases. Or, perhaps you are approached by the company that sells the product or markets the services which are just “upstream” or “downstream” from your main line of business.
The initial approach may talk of purchase, or it may be much subtler – perhaps with discussion of a business partnership or joint venture to increase sales of both entities. Listen, learn, and hone your senses for better understanding the wide range of business synergies possible in your industry.
2. You may hear about or learn of new comers to your marketplace, as varied directions of new business interests press increasingly close to your home base. Every industry changes or evolves over time, and business alliances shift to accommodate changing needs of customers. It is easy to miss the signs of changing winds, but realization of such changes to come can be powerful clues to opportunity.
As an example, ten years ago we worked with multiple material handling manufacturers – including makers of conveyor belting, elaborate conveyor exchange systems, bag fill equipment, palletizers, and more. Then, we began to hear of intense desire by all of these varied conveyor equipment manufacturers, for expertise in and ownership of sophisticated computer control systems for routing and direction of complex inter-connected material movement processes. The next generation material handling manufacturer had to carry systems integration capabilities, or they were no longer viable forces for the evolving needs of their users. An entire industry was changing, and only the alert and prepared would survive.
The owner who keeps alert, nurturing his own curiosity and interest in his changing marketplace, often may see the natural coming of next phase alliances in his industry, and thus be attuned to exciting possibilities for future growth.
3. Your natural internal “opportunity alarm” should begin to give you an overwhelming tickle or itch, when sales take off in a suddenly very powerful ascent. Obviously owners feel excitement and stimulation, and energy devoted to reeling in the fast-budding opportunities of growth. But that is also one of the great signs of potential for value explosion.
The natural response for owners is often to ignore any potential consideration of possible sale, when things are going particularly well in their internal sales stats. However, this sometimes can be the “miss” of a lifetime, as the world suddenly begins to notice and get excited about future potential. Sometimes the best moment for intense market velocity is in that very early stage of upturn, when the world can imagine potential for truly outstanding growth. If you wait another year or two – that imagined potential will have to be proven. Sometimes the earlier stage hope “sells” better than any actual history can.
As these various indicators come to your attention, if your instinctive feeling for opportunity is tickling you to look, it pays to get help. There are outstanding seller representatives who, in almost every case, can make far more of the opportunity than you can do personally, and they (we) all love the chance to do so!
It’s not inexpensive to hire the right kind of help – but it will almost inevitably pay greater dividends than you would imagine. You need to run the company, and focus upon keeping it strong and growing. On an average sell-side engagement, our people spend in excess of 200-300 hours in the first month. That is not a “spare time” endeavor. Furthermore, if you take your discussions with prospective buyers through those first 3 or 4 interviews first, without help, you may do damage in positioning that cannot be undone.
Stay alert, and continuously sharpen your “nose” for opportunity. When it’s time to test the waters, get help to do it right. It will pay off more than decades of running the company alone, and will leave your company – the foundation you have built – with every opportunity to continue to grow and become more.