One extremely useful element in preparation for sale, which can and should be practiced well in advance of sale, is the gathering of market intelligence. Such intelligence includes data about who the buyers commonly are in your business segment, but it’s also much more. It’s about how buyers determine value, and what types of companies they like to buy.
Discovering long-term trends and patterns in your industry can be immensely helpful when it’s time to cash in. Additionally, the accumulation of operating statistical information about others in your industry can be a great tool. It will alert you to the problems and opportunities, whether you’re considering sale or not. Finally, when the time comes to sell, it gives you the powerful ammunition with which to identify and better prove your strengths by comparison to industry norms.
The process of gathering functionally useful market intelligence is best pursued from several different angles:
1. Who is buying whom, what are they paying for purchase, and what are the long term strategic targets, 2. What is average and what is good performance in your business niche, and how do you measure in comparison to others in your market, and 3. What are the long-term trends and shifts taking place in your industry, with respect to the basic shape and form of your prime customers, your product, and its delivery?
In some industries, an owner can gather excellent data, such as industry norms, directly from trade associations and magazines. More commonly, however, the information which is publicly available is imprecise and not quite on point to your particular business. For example, industry categories are often too broad to allow accurate comparisons. Obtain all possible information, but don’t use it without careful scrutiny.
Mark Twain said, “There are three kinds of lies: (1) lies, (2) damned lies, and (3) statistics.” Statistical comparisons are worth the time to obtain and analyze, but only with due care to find information of real pertinence and comparability.
The best information may come from buying groups or joint-venture alliances, or even from conversations with friends. The more you’re able to build your understanding of how you fit into the picture of your total market, and where your company is particularly strong or weak, the better you will be able to deal with the questions that will arise in marketing your company.
It pays to be vigilant and attentive to changes in your marketplace; the gradual but significant trends. When business is tough or stressful, most owners tend to buckle down and focus on the details with such intensity that they totally lose sight of the big picture. Once every few months, the prudent owner will lift his head and try to look from afar. Such vision will offer keen insights not only into prudent operating or marketing direction, but also into sourcing for premium buyers of the future.