1、MARKETING THE VENTURE FOR VALUE REALISATIONINTRODUCTIONTwo of the biggest challenges an entrepreneur at start up faces are in building the leadership brand position for the venture and then creating and relentlessly communicating the marketing programme to maximise the ventures value realisation on
2、exit. BUILDING TO SELLFor entrepreneurs going for the value realisation exit objective, their business decisions and the way they operate the business is going to be singularly focussed on attaining the best price that a target buyer will pay , when the time is right. Theyll be considering and learn
3、ing about why a potential buyer would want the business? Just who are the prospective buyers to target? - becomes a key business issue. Building to sell is different to building to operate over the long term. Knowing who and what the target buyer wants has important operational and strategic implica
4、tions. For example, it can be the case that the buyer is not interested in the real estate, buildings and physical assets of the business. It makes financial sense therefore to strip these out of the company and then concentrate on what the buyer would be interested in the customer base. Potential b
5、uyers may have a critical customer base size criteria, which then becomes a driver for your business to perhaps acquire smaller competitors in your space to speed up attainment of that customer base size. POSITIONING IN TWO MARKETSFor the venture with a value realisation objective, the business has
6、to be positioned to two markets the capital markets and the prospective buyer markets. In terms of marketing to the capital markets, it is important to develop and nurture relationships with your industrys investment bankers and advisors. They not only take companies public, but also act as intermed
7、iaries between the two parties involved in an acquisition. Building these relationships involves personal meetings & contacts and participating in investment conferences sponsored and hosted by the bankers and advisors. In order to get on the radar of prospective buyers, attendance and exhibition at
8、 key shows and conferences is critical as are carefully targeted one2one presentations to prospective buyers. To get the best price, your business is going to have to be at its maximum value to any buyer. This means planning strategically for the optimum time of sale to the most likely buyers- not a
9、bout when is the best time for you to sell it.There are two basic types of buyers, financial and strategic. Financial buyers look for businesses they can buy- to then subsequently sell. Many look for niche companies with strong managers who want to remain with the company after the closing. They may
10、 not acquire 100% of the business. Their objective is to take the business to the next level and sell for maximum value. This gradual exit, with a further share of new value realised at sale time, is an attractive option for many entrepreneurs. Strategic buyers typically operate in allied industries
11、 and acquire because of expected operational benefits or strategic advantages when the two companies come together. This is also known as a trade sale. Strategic buyers will acquire 100% of the business. Selling to either type of buyer means the entrepreneur will have to stay on for a transition per
12、iod. An unwillingness to do this will result in sacrificing value, as the buyer discounts the added risk of an abrupt departure. When a prospective buyer comes along, the likelihood of the deal being done, at a price that maximises the entrepreneurs exit value , is influenced by the degree to which
13、the brand and business has their ducks in a row.PURCHASERS OBJECTIVESA potential trade purchaser will have specific reasons for targeting your company for acquisition. It is important to understand where the purchaser perceives value to be and the motivation for acquisition. Most of the reasons will
14、 be related to leadership brand positioning, such as:Market Share /Entry - objective may be to increase market share or establishing a presence for existing products in new marketsVertical Integration - motivation may be to secure sources of supply or distribution outlets for the purchasers goods or
15、 services.Diversification - objective may be to broaden product range or enter new markets.Strengthening - purchaser may be interested in acquiring specific resources such as management team, production capabilities, distribution channels.The key criteria which any potential purchaser will consider
16、include Turnover Profitability Employee Numbers Ownership Location Main Products or services Customer base Suppliers Distribution arrangements Fixed AssetsDUCKS IN A ROW When a prospective buyer comes along, the likelihood of the deal being done, at a price that maximises the entrepreneurs exit valu
17、e , is influenced by the degree to which the brand and business has their ducks in a row.Brand AdmirationNothing protects a sellers position better than having a number of competitive buyers in the wings. Make sure your brand is admired by your target buyer audience. Focus on increasing the business
18、es recurring profitsMost purchasers will place most value on the core business of the company its brand position- they will look for this to evidence continuing profits and discount any exceptional gains or profits form peripheral activities. Focus should be on ensuring that the core business has be
19、en fully developed i.e. all products and markets exploited. Eliminate weak product lines to increase overall profit margins and improve return on assets. Buyers dont want diversified businesses- they want resources concentrated in the activities that underpin a leadership brand position.Enhance the
20、quality of earnings by developing relationships with key customersEvidence of satisfied and committed customers/clients will greatly enhance the value of the company. This, again is a dimension of a leadership brand position. Efforts should be made to develop close relationships with key customers t
21、o the extent that they can be used as reference points for the business and that they are willing to nominate the business as first choice supplier.Business PlanA business plan focussed on a leadership brand position, with a Non Disclosure Agreement (NDA) is the best way to show your company to pros
22、pective buyers without signalling an intense desire on your behalf to sell soon.Transfer key owner-knowledge to management and staffNew owners will need comfort that the business can operate without the seller. In the absence of a brand platform to sustain delivery of the leadership brand position ,
23、 other measures will have to be actioned.Management depth adds value. Appointing a deputy and department heads alleviates buyer risk It will be important that any knowledge or contacts which are currently exclusive to you are passed on to appropriate management and staff.Ensure suppliers and custome
24、rs can be used as reference points for the company.Interested parties will often approach suppliers and customers for independent opinions of your company. It is important to recognise this in advance and resolve any issues or practices which may result in an unfavourable reference. Resolve tax issu
25、esAny tax issues requiring agreement with Revenue Commissioners should be resolved and liabilities agreed. Any unresolved tax issues will lead to uncertainty on part of purchaser and their advisor will insist on taking worst case scenario into any valuation calculations. Furthermore the appearance o
26、f a company with tidy and up to date affairs will lend to attraction whereas the existence of one unresolved issue leads a purchaser to question whether there are any other impending issues.Clarify ResponsibilitiesThe sale of an organisation is time-consuming, complicated and stressful. It would be
27、easy to allow day to day business to suffer whilst the sale is being pursued thereby damaging the companys value. Get your advisory team in place to represent you in dealings with prospective buyers and their representatives and ensure staff are unaffected by the process.Up to Date Management Inform
28、ationAudited financial statements are reassuring to a buyer (and their banker) and are the best indictor of future performance of the business Prospective purchasers will look at most recent audited accounts for financial data however comprehensive and timely management accounts will allow them to g
29、et a better understanding of the companys operations and its performance since last financial year end. This is particularly important where the company is on significant growth path and value has increased since last year end. Also the availability of management data will give confidence to purchas
30、er that the company is well managed and controlled.Define Accounting PoliciesManagement should ensure that accounting policies in use are relevant and practical. The use of any contentious policies for valuation purposes or income recognition will lead to protracted dialogue with interested purchase
31、rs and may result in confusion over company value.Protect Intellectual PropertyAny IP within the company should be thoroughly protected. This will assist potential purchasers in assessing the worth of the company and will prevent other parties from exploiting information obtained from sale process.B
32、usiness ValuationA professional business valuation for gauging buyer offers, but dont disclose it, until you get the offers.Value any property or significant assetsIndependent market valuations of any assets such as land or property will assist pricing process.Consider sale (and leaseback) of any no
33、n-essential assetsRemove other assets (such as land) that are not contributing to earning power. Your proceeds will probably be higher and you will improve your financial ratios if you strip away such assets. Many purchasers will not wish to outlay capital for non-essential assets, if any of these c
34、an be used on a leased basis consideration should be given to putting appropriate leases in place.Adopt corporate governance standards applicable to a public companyOwner-managed businesses can cut out some elements of corporate governance as they are not accountable to external shareholders. However prior to sale it will be necessary to start viewing the company from the eyes of prospective purchasers. Implementing corporate governance procedures will assist in this process, management should prepare board papers, document decision making process
