Posts Tagged ‘marketplace’

Buyers for your company: How to build a great list?

by Steve Popell on June 14, 2010

In a previous post, we discussed the fact that becoming an attractive strategic acquisition candidate should begin with learning precisely what prospective buyers think that means, and how to elicit that information in a series of telephone interviews.  But, an equally important element is determining whom to interview.  This post will address that question.

The first, and most obvious, step in compiling a list of prospective buyers in your industry is simply to brainstorm with anyone who fits the following profile.

  1. Has a valid input on this topic
  2. Can be relied upon to keep totally confidential even the fact that there has been such a conversation.  The notion that your company is (or will soon be) for sale can be very destructive in the marketplace.

As long as you have complete confidence in the discretion of each individual, the more contributors the better.

The next step is to consult as many merger & acquisition databases as you can identify.  Database research can help in two distinct ways.  First, it can provide information on specific acquisitions.  Second, and as importantly, it can suggest matchups that might not have occurred to you and your colleagues.  Discussions that follow will often lead to whole new categories of prospective buyers.  The basis for this research is your company’s Standard Industrial Classification (SIC) code number, along with the parameters that are most relevant, such as:

  1. That the SIC code number relates to sellers;
  2. Period of investigation (e.g. last three years)
  3. Sellers’ annual revenue range
  4. Whether to include international buyers and/or sellers

When in doubt, do not leave out any parameter, or narrow it unduly.  It is far better to have too many data points than too few.  You can always drop any that prove to be irrelevant.

The rest of this part of the process is iterative; i.e. back and forth between brainstorming and database research, until you feel that you have reached the point of diminishing returns.   At that time, shift your attention to identifying a specific executive to interview in each company.  This information should be readily available on the prospective buyer’s website.

In a relatively small company, the CEO or CFO is the most likely choice.  In a larger company, there may be an individual specifically charged with acquisitions, such as the Director (or Manager) of Corporate Development.  Since the title will vary from company to company, it may be necessary to click on the name of someone you think may have this responsibility.  His or her write-up should be very helpful in this regard, and will probably provide contact information, as well.

Once you have developed the list of companies and individuals to contact, craft a questionnaire along the lines discussed in the previous post, conduct the interviews, collate the data and, finally, analyze the results.  The product of all this effort will be the profile of the attractive strategic acquisition candidate from the perspective of the marketplace.

Good luck.

PhotoPopell This article has been contributed by Steven D. Popell. Steve has been a general management consultant since 1970. Steve is a Certified Management Consultant, business valuation expert, and inventor of ExiTrak®– a process designed to assist the privately-held company owner/manager to build an attractive strategic acquisition candidate

Quality #9: Quality of Relationship and Communication

by Tanmay Vora on November 19, 2009

Welcome to the ninth post in this 12-part series on QUALITY, titled #QUALITYtweet – 12 Ideas to Build a Quality Culture.

Here are the first eight posts, in case you would like to go back and take a look:

  1. Quality #1: Quality is a long term differentiator
  2. Quality #2: Cure Precedes Prevention
  3. Quality #3: Great People + Good Processes = Great Quality
  4. Quality #4: Simplifying Processes
  5. Quality #5: Customers are your “Quality Partners”
  6. Quality #6: Knowing what needs improvement
  7. Quality #7: Productivity and Quality
  8. Quality #8: Best Practices are Contextual

#QUALITYtweet How NOT to deliver total quality:

Focus on quality of product without focusing on

quality of relationship and communication

In an increasingly service oriented business environment, what you sell is not just a product but an experience. People may forget explicit details like specifications or price, but never forget the experience they had when they bought the product.

Experience extended to end-customers largely depends on attitude, values and behaviors of each individual who interacts with a customer. One of the most important challenges is to keep this group of people aligned to organization’s quality system and values.

Communication is the backbone of organization’s success in marketplace. Effective internal and external communication within an organization ensures that:

  • Your employees understand your value system
  • They understand what is expected out of them
  • They are motivated to walk an extra mile to deliver excellent service
  • Your customers know your value system
  • You build trust-based relationship with your people and customers with consistent communication
  • Manage expectations with your people and customers.

How can you motivate your teams to deliver excellent customer experiences through simple communication processes? Here are a few ideas to consider:

Train:

Training your internal team can be your biggest tool for clearly explaining the process of communication and how important it is for the business. Consistently train your people on value systems, leadership, quality management, effective communication, what works in customer management, what not, expectations management and cultural aspects of client’s location. Clients also need training on how best they can use your products. Companies organize client workshops to educate them about different aspects of product/service. Train consistently to streamline communication.

Support:

Once your people are trained, you need to support them in doing right things. Supporting can be a simple act of being there with your people when they talk to customers. Help them improve and share feedback on how are they doing. Some companies may see this activity as an “overhead” but it is an “investment” in your people.

Monitor:

Once you have confidence that your people will be able to do the right communication, monitor them. Take periodic feedback from them. Communicate consistently to ensure that they are motivated enough to continue doing it.

Delivering consistently superior experience to your customers (via quality of products and communication) results in a long-term relationship based on trust. In business, as in life, relationships are crucial. Quality of your relationships is as important as quality of your products, or perhaps, even more.

strageic acquisition just askIn a recent post, we discussed the significant difference between the financial acquisition value and the strategic acquisition value of a privately held company.  Obviously, before you can convert your company into an attractive strategic acquisition candidate, you have to learn just what that means in your industry.  But, how can you do that?  You certainly can’t just walk up to a key acquisition executive and ask, can you?

Actually, with a few important modifications, that’s precisely what you can, and should, do!  Well, not you personally, because it will be important to keep your company unidentified.  Just have a trusted advisor conduct these interviews on your behalf.

Once you and your team have developed a list of likely buyers, design a questionnaire that will take no more than 15 minutes to complete on the telephone.  The questions you ask will largely depend on your industry and the data you want to gather on where these executives think the industry is headed.  However, two questions will be common to all questionnaires, irrespective of the size of your company or its industry.

  1. If you were to acquire a company in this industry today, which strategic assets would be most valuable to you?
  2. How are these preferences like to change over the next few years?

If your interviewer talks to enough acquisition executives (15-25 should do it) and compiles the responses, s/he will have put together the profile of the attractive strategic acquisition candidate from the perspective of the marketplace.  Next, conduct a “gap analysis” that compares this profile with the strategic profile of your company.  In other words, how does your company stack up on each strategic asset regarded by a number of interviewees as important?  In most cases, your individual strategic asset ratings will fall roughly into three categories.

  1. We are in very good shape, and need only fine tuning.
  2. We have made significant strides, but we have a long way to go.
  3. We are pretty close to the starting blocks.

Once you have made these judgments, you can decide which strategic assets to acquire and/or enhance in order to move your company’s strategic profile closer to what the marketplace has specified.  Consider these possible scenarios.

  1. Many interviewees indicate that they would be very interested in acquiring a leading regional company in your industry, but not a local one.  This would suggest that acquiring one or more companies in your industry or, perhaps, merging with a larger competitor elsewhere in your region, would make the equity in your company much more valuable.
  1. A number of executives indicate that some important product development opportunities are stalled because the components currently available in the market are technically inadequate.  One or more of these components is within your company’s technical expertise.  This information could affect your strategic product development effort in a very positive and targeted way.
  1. You have been planning to expand into a new market niche, and have narrowed the choices to three that appear to be roughly equally promising.  The interviews yield the information that one of these three would be considered very valuable to many prospective buyers.  Case closed.

Once you have made these decisions, you need only incorporate them into an effective strategic plan, complete with areas of individual responsibility, deadlines and standards of performance.  Good luck!

PhotoPopell This article has been contributed by Steven D. Popell. Steve has been a general management consultant since 1970. Steve is a Certified Management Consultant, business valuation expert, and inventor of ExiTrak®– a process designed to assist the privately-held company owner/manager to build an attractive strategic acquisition candidate

What is Business?

by Vijay Peduru on September 28, 2009

global network of helpThere are a lot of definitions for business. But I am interested in just the simple and fundamental way that we can define a business.

So, what is a business?. Fundamentally, business isproviding good help’.

Think about it. Every human being needs help. Otherwise he or she cannot survive.

Some of you may disagree.

Before you say anything, let us look around in our life. Notice the help we are receiving almost everyday. The jobs we have, the house we live in, the mail we get are all provided by someone else. As human beings, we need help.

The best way to get help is to give help. We work for someone to provide our services and they help us back by giving us money.  When we need help, we typically look for the best help that we can possibly afford.

Over time the market in which we provide “help” keeps getting bigger and bigger with each new radical innovation. When cars became mass produced, people could travel long distances to get the help they needed. This changed the way people used the marketplace. If they wanted a job in another part of town, they could take it, since they had a car to drive to that part of town. If they wanted to buy something which was available in another town, they could drive and get it. When Airplanes were introduced, people could travel around the world to provide their “help” or get the “help” they needed.

In the very old days, a person with a skill could provide help to others living in the same village, for example a blacksmith could provide his service to people in his village. As the tools of transportation and communication evolved, many more people were able to use his services like those in the neighboring villages. Today, with the advent of the internet and the economy changing from an industrial to information age, a guitar maker ( in crude terms, a modern day blacksmith ) in any part of the world can sell his handmade guitars to anyone in the world. Rick Toone does this. I am sure without the Internet, he would not have a large enough audience for his “help”.

Even when we play online games or want to watch a movie, we are looking for the best game or best movie, Since we cannot personally make a game or movie, we are looking for help to be highly entertained. There are free games and free movies but ultimately they exist because both the provider and the consumer get benefited in some way. When you visit Disneyland , you want the best entertainment (help) and Disney can provide that in return for the money (help) you pay to enter.

So, as entrepreneurs, what can we do?

The bottom line is this: As long as we can provide good help, we have a high chance of succeeding as people are always looking for better help.  With the world as our market, there is a high probability that we can find a large enough market that needs our help.

—-

Vijay Peduru is an entrepreneur in the bay area and is the co-founder of a bootstrapped startup. His interests are bootstrapping, leadership and spirituality.

This is the time to shine

by Robert Driscoll on July 9, 2009

sales_chartSelling in today’s marketplace is tough and no one knows that better than salespeople. Today’s environment is completely different than it was 10 years ago, let alone last year. In past posts, I stated that you need to differentiate yourself and learn everything about your products and services (Selling in 2009) and how it costs more to find new customers than it does to maintain existing ones (Listening To Customers Through Twitter). I know this might sound like common knowledge, but more often than not, we get blinded by our traditional way of thinking no matter how common or invaluable the message is.

If you’re in sales, you need to rethink how you sell to your customers today. If you’re waiting for the phone to ring with an order from your customer, you will suffer. If you continue using the same “sales techniques” that you used a year ago, you will suffer. So, what does one do in these trying times…?

Here are 5 ways to think (differently) about selling in today’s marketplace:

1. Go after customers you called on before – Your competitors are dealing with this recession too and they may have stumbled recently.

2. Relationship selling – Position your offer with the right people. Don’t’ sell from the bottom of your customer’s organization, but rather from the top. Selling doesn’t need to be high pressure, but it will be if you are making your offers to the wrong people within your customer’s organization.

3. Don’t sell technology, sell business improvement – Almost every customer is cutting their spending budgets, so show them how your offer will help them through these difficult times and will eliminate current and future breakdowns. This will create new possibilities for you and your customer.

4. Help companies reinvent themselves – Some companies need to make drastic changes in order to weather this storm but may not realize it. Understand their concerns and help bring them to the forefront and show how your offer can help them.

5. Be prepared – It’s important to execute better than your competition. Respect your client’s time and get it right the first time.

Changing how you sell to your customers today is a matter of survival. You have to be great at showing your clients you can help them improve the way they do business, or else they will find a partner who will. Preparation and a clear understanding of your customers concerns will not only help you sell through this recession, but prosper as well.

Gone are the days of basking in the sunshine, instead… this is the time to shine!