As owners who are considering sale speak with buyers about their companies, they are sometimes embarrassed and somewhat shy about acknowledging the spots in their organizations that are the weakest, or the least well-developed. When you realize that an area is weak for your company, it is absolutely natural to be shy about it. However, a straightforward acknowledgement of the weak spot in the organization can be very exciting to the buyer who knows how to shore up that weakness!
We sold an injection molding company some years ago, which had a long history of steady profits, and consistent although modest growth over the years. That company had not one single sales person in its organization. They did well in spite of the lack of sales staffing because they consistently produced product of high quality, and did so regularly on time and as scheduled. Their growth came from referrals from other happy customers.
Reactions from buyers were interesting – and in almost every case, the weakness in sales and marketing actually made the company MORE appealing. The company was growing, modestly but steadily, without a sales force. We sold the company well, and the buyer was a much larger organization with a very sophisticated marketing and sales force. Post-sale, that company grew to almost three times its original size within three years under the new operation!
In other situations, a given weakness within the organization may have value if the seller can find the perfect buyer. We sold a company years ago which had a 70% customer concentration in business with Whirlpool. As we marketed the company, almost 90% of the buyers we talked to declined immediately, due to fear of the customer concentration. The trick to sale of that company was in finding the buyers who very much WANTED access to Whirlpool. We ended with only three bids for purchase of that company – but all three were strong bids. The winning buyer wanted and got preferred access to Whirlpool.
In presenting your organization to possible buyers, it inevitably pays to be completely honest, and straightforward with buyers. Buyers must have confidence that they know what they are buying, in order to stretch pricing to maximum. And, even the soft spots within your organization offer opportunities for enhancement to just the right buyers. Identifying buyers who “fit” the needs of the seller company can make a tremendous impact on outcome!
