{"id":2343,"date":"2015-08-13T10:00:56","date_gmt":"2015-08-13T17:00:56","guid":{"rendered":"https:\/\/berkonomics.com\/?p=2343"},"modified":"2015-07-20T12:08:15","modified_gmt":"2015-07-20T19:08:15","slug":"look-for-your-strategic-buyer-first","status":"publish","type":"post","link":"https:\/\/berkonomics.com\/?p=2343","title":{"rendered":"Look for your strategic buyer first."},"content":{"rendered":"

Dave’s note:\u00a0John Huston<\/em><\/strong> is founder and past manager of the 300+ member Ohio TechAngel Funds and a past Chairman of both the Angel Capital Association and the Angel Resource Institute.\u00a0\u00a0\u00a0 <\/em><\/p>\n

By John Huston<\/strong><\/p>\n

While you are busy building your high growth venture, you may have occasionally thought about which large companies might be the ultimate buyer of your company \u2013 a buyer that could optimize your idea, customer base, and team.\u00a0 If you have professional angels or venture capitalists among your funding sources, you have probably been focused on your company\u2019s sale well before they wrote their first checks.<\/p>\n

To simplify the obvious question, you should ask: \u201cIn whose hands does my company have the greatest value?\u201d\u00a0 But remember that each potential acquirer should be evaluated in \"StrategicBuyerLogo_250\"<\/a>terms of both their ability<\/em> and their willingness<\/em> to make an acceptable offer for your company.<\/p>\n

Assessing their ability<\/em> is fairly straightforward, especially if you will only take an all-cash bid.\u00a0 You merely need to forecast the likelihood over the next few years they will have the financial resources to be the high bidder for your venture.\u00a0 For publicly traded potential acquirers, reviewing their public filings regarding previous acquisitions can be quite illuminating – especially finding information about whether they have borrowed to finance past company purchases.\u00a0 Many large companies have a preferred template from which their deal teams rarely stray.<\/p>\n

[Email readers, continue here…]<\/em><\/span> \u00a0Once you are comfortable with a potential acquirer\u2019s ability to make a winning bid for your company, then you only need to focus on how to increase their willingness<\/em> to do so.\u00a0 Ideally each target company has a history of consistently making acquisitions with deal terms you would accept.\u00a0 This means they routinely acquire strategic assets and not just financial cash flow streams, paying a premium to do so.<\/p>\n

Let\u2019s presume that you have identified three to five targeted bidders whose interest in acquiring your company you now need to heighten.\u00a0 How can you accomplish this?<\/p>\n

The first step should be to honestly assess the allure your company might have to each targeted strategic acquirer.\u00a0 Then think about how your company\u2019s daily activities are enhancing that most attractive aspect of your business in the eyes of each potential bidder.\u00a0 This makes it much easier to allocate your capital as you prepare for a sale of the company – since the goal is to spend it only in ways which will impress just a few companies.\u00a0 Cash spent on activities which do not burnish your attractiveness is cash squandered as you prepare for the sale.<\/p>\n

Buyers, especially strategic buyers, pay premiums over book or shareholder value.\u00a0 That premium is your focus.\u00a0 And it can only be truly determined once the buyer\u2019s wire transfer appears in your account.<\/p>\n

When you were just commencing commercial sales and refining your business model to achieve positive cash flow, you were focusing on survival.\u00a0 Now, the sooner you can allocate your cash and activities toward impressing targeted strategic bidders, the sooner that beautiful wire transfer will arrive in your bank account.<\/p>\n","protected":false},"excerpt":{"rendered":"

Dave’s note:\u00a0John Huston is founder and past manager of the 300+ member Ohio TechAngel Funds and a past Chairman of both the Angel Capital Association and the Angel Resource Institute.\u00a0\u00a0\u00a0 By John Huston While you are busy building your high … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[13],"tags":[],"class_list":["post-2343","post","type-post","status-publish","format-standard","hentry","category-the-liquidity-event-and-beyond"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/2343","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2343"}],"version-history":[{"count":0,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/2343\/revisions"}],"wp:attachment":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2343"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2343"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2343"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}