M&A strategy

5 Key Findings from a Survey of Executives: How to Think About M&A Strategy During an Economic Earthquake

One of the million- or billion-dollar questions firms are asking, given the pandemic, is whether this is a good time to pursue M&A strategy. Looking to high profile players, you’ll find examples both of companies, like Boeing, abandoning deals and companies, like Google Cloud, publicly saying they are open to acquisitions.

To guide your thinking about M&A best practices through the end of 2020, it makes sense to consider what we know about how firms are currently making decisions. The M&A Leadership Council recently conducted a survey of 50 C-suite executives and senior corporate development leaders about their plans. 

Let’s discuss the major findings from the survey and what they mean for you as you think about strategically positioning your firm to succeed when economic activity rebounds.

1. Deals in Progress

The good news is that deals are still getting done, especially those in later stages. While just over half (51%) of those surveyed reported a “temporary pause” in M&A activity, only 14% indicated they had halted all deals currently in the works. And 12% actually reported expediting late-stage deals, while another 12% indicated that they fully intended to proceed to deal closing assuming negotiations go well.

What does this mean for you?

If you’ve put the brakes on a merger or acquisition, it may be time to reengage your vetting process and due diligence. Go back and review your M&A best practices checklist to make sure you’re going in with eyes wide open. Pay special attention to the items on the list that may have shifted with current events and those that are most likely to be volatile as the economy sorts itself out.

Proceed as follows:

  • Meet with your project team to regroup and discuss moving forward
  • Review monetary and non-monetary assets and business priorities
  • Make an exhaustive list of questions that have recently come to light

2. Anticipated Deal Volume

With regard to deal volume, it’s no surprise that 26% of executives report a substantial reduction in the number of M&A deals for the remainder of 2020. Additionally, the 51% of executives reporting that they are on a “temporary pause” expect to remain paused until they see signs of an economic recovery, which is not likely to happen before the end of the year.

Despite this sobering news, 23% of respondents anticipate no significant change to or an increase in the number of M&A plays they pursue this year. For buyers staying in the M&A game, four motivations were prevalent:

  1. Seeing opportunities in M&A hotspots
  2. Looking to gain the “first mover advantage,” while other prospective buyers are still in shock and trying to sort out their plans
  3. Needing to innovate or reposition for post-COVID market realities
  4. Wanting to accelerate commercialization of the most promising new technologies, medical advancements, or delivery systems

What does this mean for you?

You aren’t necessarily crazy if you’re seeing opportunities for M&A plays. If your balance sheet is strong, your stock price steady, and access to credit solid, it may be a great time to keep your eye on who you want to partner with as we reinvent our post-pandemic work lives. 

3. Deal Objectives

Many companies are predictably broadening the scope of deal types they’re considering. While 57% indicated they’re most interested in doing deals similar to those they’ve done in the past, the data also suggest these acquirers simultaneously shopping in several different strategic deal-types.

59% reported their intent to opportunistically buy distressed companies and 23% said they are targeting new, non-core technologies, solutions, or segments to intentionally diversify their future revenue streams.

What does this mean for you?

Acquiring companies that are struggling during tough economic times, but which will likely thrive quickly once the economy picks up steam again is a valid M&A strategy. Play your cards right and you could end up with a really lucrative deal, while saving a technology or smart solution, which might otherwise be lost to the dustbin of history.

It’s also a good time to consider how to diversify or reinforce your own revenue streams. Many firms experiencing a slowdown in the past few months have taken the time to strategize about insulating themselves from future economic distress. One savvy strategy is thinking outside the box about new ways to bring in revenues and develop new efficiencies.

In addition, for firms concerned about their own ability to weather the pandemic storm, a “marriage of survival” may be a mutually beneficial solution. If you know of a competitor or adjacent company that you suspect to be in a similar struggle for survival, it might be worth a phone call.

4. Operational Challenges

Sellers in prime position will be in high demand. Any sellers who are ready to do a deal, but confident about surviving the economic lockdown, will be prepared to hold out until P&L statements recover. So finding the best play may be more of a challenge than you anticipate.

Additionally, this may call for a level of due diligence and dialogue that some buyers aren’t prepared for. For instance, looking at 2020 financials, to what extent have core fundamentals, competitive pressure, or other internal or external factors impacted the drop in revenues? How confident are you that the impacts attributed to COVID are accurate? Also, how should your leadership team evaluate and validate the target company’s rebound plan?

What does this mean for you?

If your firm is eying an M&A strategy as a buyer to gain market share, keep in mind that the most attractive sellers will be in high demand. You’ll likely need to get creative about bridging the valuation gap. Consider: 

  • Valuation, 
  • Deal structure, 
  • Growth incentives, and
  • Talent retention.

Your strategies here will need to be simple and convincing to win the bid. Remember, acquisitions, even in the best of times, are highly emotional transactions. Now is not the time to spare the empathy. If you want the transition to be smooth, be sensitive during this delicate dance.

5. M&A Capabilities

Finally, survey respondents reported they are calling in reinforcements to bolster their internal M&A capabilities. For many firms, operationally executing an M&A strategy amidst so much economic uncertainty, across all deal phases, and over multiple deal-type scenarios requires a level of M&A sophistication beyond what they currently have in place.

As the chair of the M&A Leadership Council, Mark Herdon, cautions us: “Mergers and acquisitions are notoriously difficult in any environment and post-Covid, they may be even harder. Setting aside political sabre rattling from the recently proposed ‘Pandemic Anti-Monopoly Act’ [which could also throw a monkey-wrench into your M&A plans], even the most skillful acquirers may be hard-pressed to navigate other real-time acquisition challenges.”

What does this mean for you?

Upleveling your M&A strategy means upgrading your M&A operating processes, playbooks, software solutions, skills, and resources to enable working remotely for any deal type, market environment, or deal volume. To support your crisis recovery strategic objectives, consider carefully any gaps you might need to fill.

Of course, shoring up your M&A capabilities need not require a long internal hiring process. Working with an external team that has significant skills and experience in the M&A space offers several advantages. Audacia Strategies offers a network of specialized partners who bring specific expertise, depth of resource, and proven experience. Check out our services to see how we can support you. 

Photo credit: Gino Santa Maria

best communications practices

A New Look at “Chaos is Our Brand” in Light of the Coronavirus Crisis

When Audacia Strategies CEO, Katy Herr, originally taped this interview with Dan Doran, CEO of Quantive, for his podcast The Deal—Unscripted, we had no idea just how relevant it would be now during the current crisis. A year later, we are living a case study in crisis communication and thought it was a good time to revisit some of the takeaways about best communications practices from that conversation.

1. Don’t Wait to Create a Strategy for Best Communications Practices

This recommendation applies as much to a wide-spread crisis situation like the Coronavirus pandemic as it does to a big company transition like a merger or acquisition. It never pays to procrastinate on creating a communications strategy.

If you find yourself without a clear strategy, you’re likely feeling the pain acutely in this moment. As far as we know, no one has invented a time machine, but there are some things you can do to develop a stop gap strategy:

  • Stay calm and present as you weigh your options.
  • Figure out who needs to hear from you, when.
  • Develop straightforward messaging that doesn’t promise more than you can deliver.
  • Make sure you have a designated team with assigned roles to streamline communications.

For more ideas, check out 5 Lessons from our Crisis Communications Playbook

Many of our clients contact us when they’re facing one of two situations: times of crisis or times of transformation—hence our unofficial tagline: “chaos is our brand.” This makes a lot of sense, but too often what we find is that if an organization hesitates to develop best communications practices and a communications strategy early enough, things can go off the rails quickly. 

At the risk of sounding too sales-y and mindful of the many hardships experienced during this time, here are a few of the benefits of using an outside communications firm:

  • An outside set of eyes gives you transaction experience, critical perspective, and unbiased advice when communicating your message to the outside world.
  • An outside firm is in a good position to place your organization in a broader context (i.e., the competitive set, the market, and your financial stakeholders), while you focus on running day-to-day internal operations.
  • An outside firm isn’t influenced by the “groupthink” or silo-ed communications that can be an obstacle to projecting the strongest public image.

Whether or not your organization ultimately decides to enlist the help of a firm like Audacia Strategies during this crisis or the next one, the most important thing you can do is start strategizing ASAP.

2. Think About Who Your Stakeholders Are 

In this moment of uncertainty, you are right to worry about accidentally leaving stakeholders off of your list of communications. One of the first rules of communications is to control the narrative. But if you hesitate to reach out to stakeholders or skimp on the stakeholder analysis, this is precisely the risk you take.

Remember that at its core communications is about storytelling. What is the best story you can tell to a particular set of stakeholders? Suppose the governor in your state has decided your industry is among those allowed to reopen, but you disagree with the reopen policy for your business. Your best bet is to be honest with your employees, customers, and investors. State your case and speak your truth.

Depending on whether you are a publicly or privately held company, stakeholders could include any or all of the following sets:

  • Employees
  • Customers
  • Financial stakeholders: 
    • Public debt holders and ratings agencies
    • Private equity companies and banks
    • Investors or shareholders
  • Community partners
  • Contributors (for non-profit organizations)
  • Business partners and service providers
  • Strategic partners
  • Government regulators and political community (local, state and federal) 
  • Media and industry influencers

3. Understand the Difference Between Marketing and Communications

This is especially important now when best communications practices may require a very light touch. If you think you can “get by” using your internal marketing department to craft crisis communications, you may want to reconsider. 

Marketing and strategic communications are different tools. Whereas marketing primarily focuses on telling the story of how your product or service will help your target customers, strategic communications partners can knit together the entirety of the business story to give investors and other stakeholders a comprehensive picture. As the experts in helping clients weather chaos, we have developed best practices over many transactions, crises, and change events.

Now is the time to ask big picture questions about how your market may respond to this crisis, how resources should be optimally redirected, and how investors, customers and employees should be engaged throughout. This is a great time to consider what has changed for your customers and employees and what you can offer as we begin to feel our way through life post-lockdown.

4. M&A Tips and Tricks

As we hopefully begin to see COVID-19 infection rates peak over the next several weeks and markets start to stabilize, many predict that M&A (mergers and acquisitions) will start to pick up in certain industries. This is, of course, assuming lawmakers on Capitol Hill don’t place a moratorium on big mergers—a conversation we’ll be monitoring closely.

There are still a lot of unknowns here, but if a merger is in your future, we work with corporate development teams, in-house financial teams, lawyers, and investment bankers helping them think through the market and storytelling from an M&A perspective. At its core, M&A is about risk, the ability to manage risk, and telling the story of how the acquisition fits into your broader business strategy and culture.

For example, if you’ve been working on a deal that has been in the preparation stages for months, should you call it off or push forward to completion? One thing is for sure: for companies that have built a healthy balance sheet during the economic boom of the past ten years, declining valuations create opportunities to pursue deals that create long-term value. While we can’t help you decide whether to hold or fold, we can help you communicate your decision.

Finally, we’ll leave you with some pitfalls and opportunities to consider when it comes to best communications practices during a merger or acquisition: 

M&A Pitfalls:

  • Companies that overpay: We have another blog post dedicated to this topic. Suffice it to say, if you overpay for an acquisition, it can create credibility issues with your investors, your Board of Directors, your employees…the list goes on. Negotiations can get emotional quickly but consider that the business strategy will have to support the valuation.
  • Cultural fit failure: We’ve seen it happen: a small start-up firm develops an amazing technology and gets bought by a huge firm looking to prove it’s innovative and “hip.” Then, within a year, all the original start up employees are gone. Avoid this kind of cultural disconnect by having an air-tight integration strategy from the beginning. Make sure you are walking your walk, so you can deliver on what you’re promising. (Pssst! Hot tip: Audacia Strategies has a new service rolling out to help avoid just this problem. Make sure you’re signed up to be among the first to get the details!)

M&A Opportunities:

  • Integration is key: The best M&A success stories are those where the merging leadership teams think about integration all the way along. When companies have a successful communications strategy that includes communicating the big vision well for both internal and external audiences, the proof is in the stakeholders’ response.
  • Customers see opportunities: Ideally, when two companies merge, customers say “this is exactly what I needed.” Rather than seeking out two solutions, for example, the customer gets one-stop-shopping from the new hybrid. It’s your job to help communicate this feeling across your stakeholder groups.
  • Employees see opportunities: And if you can also pull off a merger where employees in both companies see the transformation as good for their own careers, you’ve developed a winning communications strategy. Often employees of the smaller firm may feel anxious about being acquired. But if you can honestly demonstrate opportunities for career mobility, earnings potential, and other benefits of working for a larger company, it will go a long way toward easing transition tensions.

The above is only a sampling of the insights and best communications practices gained from Dan and Katy’s conversation. You can watch and listen to the 30-minute interview in its entirety, here

As everyone keeps saying, this crisis is unprecedented. Still, there is something to be said for working with a team that faces down chaos and keeps walking through the fire. We are here to help you figure out your next step and keep you moving forward. If you want to talk, we’re ready to strategize about your best next steps. 

Photo credit: https://www.123rf.com/profile_deagreez

M&A best practices

M&A Best Practices (Part 2): Ensure a Successful Integration After an Acquisition

This is part two of our series on M&A Best Practices. If you haven’t yet read part one, you will want to read it first: M&A Best Practices for before and during an acquisition. And, don’t forget to check out our handy M&A checklist at the end of this article!

In our previous article, we discussed M&A best practices for before and during an acquisition. The entire process can be very dynamic and exciting. For this reason, it’s important to prepare and plan well when things are relatively calm, before you find yourself in the thick of things.

Okay, so you’ve acquired an organization and the communications around the acquisition have gone according to plan. Awesome! Now what? If you’re hoping integration will simply run itself, it’s time to recalibrate your expectations. Just as planning is important before and during an acquisition, establishing timelines and procedures and opening lines for effective communications ensures that integration runs smoothly.

Now, let’s talk about M&A best practices for the weeks and months after an acquisition.

The Work Really Begins: Integrating Legacy Organizations

Effective communications surrounding an acquisition assures your workforce that business will proceed as usual and your clients that delivery is not impacted by this change. Managers are an essential link in the communications chain, both internally and externally.

When announcing an acquisition, the information will spread quickly. And, as we know, false information spreads more quickly than the truth. So you will want to have a strategy to manage your message. Carefully choreograph your communications so that internal audiences hear from you first. Ensure that your communications cascade is timely, coordinated, and that your supporting materials and spokespersons are on point.

Here’s a sample timeline:

  • Day -1, 8pm: A transaction is agreed to and the paperwork is executed.
  • Day 0, 7:30am: The CEO of the acquiring company emails her managers to make them aware of the transaction. The message includes a cover note with action items, timelines, and proofs of concept (POCs). Attachments include a courtesy copy of the all-employee announcement, manager talking points, frequently asked questions (FAQs), and a description of the acquired company.
  • Day 0, 7:30am: Similarly (and ideally simultaneously), the CEO of the acquired company emails his managers to make them aware of the transaction. Like the communication described above, the message includes a cover note with action items, timelines, and POCs. Attachments include a courtesy copy of the all-employee announcement, manager talking points, FAQs, and a description of the acquiring company.
  • Day 0, 8:00am: The transaction press release clears the wire service and then designated communications team members reach out individually to key members of the press.
  • Day 0, 8:00am: The acquiring company distributes a message to the employees of both organizations, announcing the transaction, welcoming the acquired organization to the team, and providing a vision for the future.
  • Day 0, 8:00am: Likewise, the acquired company distributes a message to employees of both organizations, explaining why this decision was made, thanking legacy employees for their service and dedication, and reinforcing the strategy for the combination.
  • Day 0, 8:00am: IT posts all employee communications related to the acquisition on a dedicated intranet page.
  • Day 0, 8:30am: The leadership team holds an all-employee call, reiterating the talking points and allowing for questions.
  • Day 0: 9:30am: Managers hold a huddle with their teams, using provided talking points, then report to corporate communications via email that the meeting took place. This email should also include any questions from employees, which can be rolled into an FAQ document as needed. Track the status of these meetings to identify teams that may require additional communications support.
  • Day 0+: Designated company personnel notify key clients that the acquisition has taken place highlighting the potential benefits to the customer and addressing customer concerns. This can include the heads of associations on whose boards company leadership serve.
  • Day 0+: Leadership calls and all-employee communications provide regular updates on the integration.

Throughout this process, the project team (see Part 1) meets to ensure deadlines are continuing to be met, issues are raised, and questions are answered. The project manager and assistant/deputy remain engaged with the collective plan, as well as with each department lead. As the combined organization achieves milestones, large or small, celebrate those!

Culture is a critical influencer in any acquisition. If employees within the acquired organization feel that things are changing radically early on, they may not buy into the change, and they may seek opportunities elsewhere. Rely on project leads to provide “temperature checks” and suggest ways to unify the group, if needed.

 Take time to take stock. There are always lessons to be learned following a significant transaction. As the dust settles, be sure to complete an after-action review to garner feedback on what went well, what could have gone better, and what should be taken into account in the future. This is also a good time to review templates and procedures that worked well and will be helpful to future activities. 

There you have it, your complete Audacia Strategies blueprint for M&A best practices before, during, and after. When you combine these tips for integrating a newly acquired organization with the tips for preparing and announcing the acquisition in the early stages, you have a recipe for M&A success. 

Here’s a handy checklist we use when working with our clients throughout the process. Are you ready to see us in action? Schedule your consultation and let’s get you on the books. We’re ready to help your organization transform and grow!

Image by rawpixel from Pixabay

M&A best practices

M&A Best Practices (Part 1): Are You Prepared for Your Next Acquisition? Our Checklist for Success

This is part one of our series on M&A Best Practices. Tune in for the exciting conclusion: M&A Best Practices for after an acquisition.

Merger and acquisition (M&A) activities present exciting opportunities to grow companies, bolster brands, and capitalize on synergies between acquiring and acquired organizations. However, the process is complicated and there are important steps to take to protect this significant investment.

The stakes are high. One article by Harvard Business Review reports that more than 70 percent of all M&A activities fail. While preparation and planning makes a difference at any stage, following M&A best practices are especially helpful in easing the strain of the due diligence and announcement processes. 

In the following article, we recommend M&A best practices to apply before and during an M&A activity to ensure positive outcomes for all parties.

Calm before the Storm: Preparing for an Acquisition

Proper planning and forethought in the months and weeks prior to your company acquiring another organization will save you time during the announcement and integration periods and avoid role confusion. It will also assist your workforce in managing change. 

best practicesIn the weeks prior to an acquisition:

  • Come up with a project name. Once you select a company you plan to acquire, e-mail exchanges will increase dramatically and a significant number of meetings will appear on calendars. To ensure confidentiality surrounding the acquisition, select a project name and use it in all communications and scheduling requests. This small step will help a lot when it comes to organization.
  •  Form a project team. Prior to the acquisition, select:

 > A project manager who will have the internal relationships and executive respect to enforce plans and deadlines, press leadership for decisions, etc.

 > A project lead from each department. This is a great opportunity to elevate high-potential employees. Tap the talent within your organization to work on a project that will have a huge impact.

> An assistant or deputy whose sole responsibility is to manage the overall project plan and support the team through upcoming deadlines/outstanding actions. Do not leave this role vacant. While it may seem that everyone can keep track of their own deadlines, that is a recipe for disaster. For the sake of accountability, it’s best to have someone else managing the timeline. 

  • Establish project spaces (both virtual and physical). Establish a site within a secure shared space online (aka a virtual data room) where teams can house acquisition-related resources and easily communicate. Every department/lead should have a defined space to house documents and review, edit, comment. Additionally, if you have a cohort of team members in one place, consider the physical location(s) where meetings will take place. Is it possible to reserve a private war room for the team’s exclusive use?
  • Develop and share project plans. Create a project plan template with a tab for each department/project lead. This could look similar in format to a Transformation Management Office (TMO) plan. This is helpful for keeping track of all of the moving pieces and identifying interdependencies.
  • Inventory your non-monetary assets. As you consider the potential value of a merger or acquisition. Don’t forget about some of your less obvious assets. What BD, HR, IT, finance, legal, recruiting, training, and other systems do you own or lease? What subscriptions do you hold? What memberships are committed and paid? What marketing equipment do you own? During the very busy integration process, you’ll want to understand where there are potential synergies and potential conflicts. Ask the same of the acquired organization in order to realize savings and achieve synergies. Save time on your end by coming up with this list now.

In the Thick of Things: Conducting Due Diligence and Pre-Announcement Activities

Once you have a target acquisition, have your banking/equity partners in place, and read-in your project team, you can prepare in earnest for the announcement.

  • This begins with due diligence, during which time you will have an opportunity to review the target firm’s operations including financial and sales pipeline information and ask questions of the acquired organization’s leadership. Time is precious and planning should run concurrent to the due diligence process.
  • Once the project team is in place, determine the frequency with which the team will meet. Likely, this will be daily during the pre-announcement period, then weekly during the integration.
  • The planning document is a living one and will change often in this phase. During team meetings, assess where tasks stand in relation to deadlines, what hot spots might flare, and what decisions are needed.
  • Governance becomes a frequent topic during this period. What role will the leadership of the acquired company play following the transaction? How will their titles, physical location, and direct reporting relationships change? It’s important to think this through instead of making assumptions. If employees don’t see a clear hierarchy and know to whom they are expected to report, chaos will be the likely outcome.
  • Additionally, consider naming conventions for the combined organization, as well as its business units or lines. Does the company name change? Does the acquired organization become a business unit, a subsidiary, or a portion of an existing business line? The answers to these questions will impact everything from the website(s) and corporate signage to stationary and e-mail signatures. Consider how you can engage employees and even customers in the re-branding process. For the best results, engage a professional as well!

One note of caution: Often, the creation, review, and approval of announcements, manager talking points, FAQs, press releases, and online content will reveal decisions that haven’t yet been finalized or information that has not yet been disseminated to the entire project team. Be conscientious about version control as you may need to do a significant amount of coordination within your team and with your external advisors (legal, banking, etc.) during this phase.

Teamwork Makes the Dream Work 

Most importantly, be patient during this process. Acquisitions can be highly emotional transactions for owners and employees. It’s necessary for the acquiring organization to be sensitive during this delicate dance, since 1) everyone wants to close the deal and 2) any rips in the culture or workforce could become red flags for your clients. This is especially true for professional services firms, in which the value of the sale lies in the company’s employees and their customer relationships. 

At Audacia Strategies, we help organizations prepare for and communicate during mergers and acquisitions. We never shy away from a challenge, in fact we thrive and hit our stride working with teams to communicate during times of transformation. If you need an M&A best practices communications strategy, let’s chat!

In our next blog article, we discuss M&A best practices in relation to running a smooth integration after an acquisition and we’ll summarize everything with a checklist you can put to use. Stay tuned!

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business growth

Does Size Matter? Planning a Successful Transition from a Small to Large Business

Business growth is always a hot topic. And lately, we’ve been having a lot of conversations with clients and potential clients about how to grow. But what really stands out is that the challenges are not so much about growing per se. They’re more about how to grow smart.

You see, when a small business is absolutely killing it, it runs the risk of outgrowing the (super helpful) “small business” designation. Suddenly, the issues are all about translating what is working well at this level to the next level and the translation is almost never one-to-one. And for businesses that work with federal, state, or local government offices there is even more to think about. It’s not unlike learning to play 3-dimensional chess.  

Yes, there are better and worse ways to move from being a big fish in a small pond to being a small fish in a big pond. So, let’s talk about how to do it well.

Mini Case Study

For instance, consider the following typical business growth scenario:

I’m a federal 8(a) or certified small business in my key market areas and I’ve been so successful that I’m about to graduate from “small business” to “large business” in the eyes of my customers. This is awesome because I’ve figured out my market and I’m on an incredible growth trajectory. BUT—How do I preserve the “special sauce” of being a small business while I grow? How do I maintain my growth trajectory? How should I think about shifting my marketing and sales strategy?

These are tough questions. But the good news is that many successful businesses have survived this kind of transition with flying colors. You can do it too. All it takes is a strong transition strategy.

Oh, and…start early! The surest way to business growth success is giving your team the time and space they need to figure things out. This is just good leadership: giving your team the tools they need to plan for the many aspects of your business that will shift as you move to a bigger playing field.

Big Picture Questions

The following questions will serve you well as you make the transition from a small player to competing on bigger and bigger stages:

1. Where do you want to be?

You’re growing. That’s AWESOME! But what is your vision for success in 1 to 3 years? It might be tempting to plan further out, like 5 or 10 years, but I’m not a huge fan of going beyond 3 years. There’s just so much that can change in your business, the market, the competitive set, technology, etc.

That’s not to say you can’t or shouldn’t have a long term view. But when you sit down to think about your investment strategy and near terms actions, it’s best to keep 90% of it focused within a rolling 3-year timeframe.

So, where do you want to be? Start there and work backward.

2. Who are you? What do you want to be known for?

And as for your special sauce, this is a great time to get clear about it. Keep in mind sometimes what we think is our special sauce isn’t really that special to our customers and partners. This means talk to your clients, your business partners, your employees…ask almost anyone you can think of what makes your business really unique. Ask them to get specific.

Also, steer clear of boilerplate marketing speak and boring platitudes. For example, way too many businesses say, “our people are our differentiator.” But the fact that EVERYONE says this means it’s not true. No business worth their salt is going out there and hiring unqualified people. It should go without saying that you’re hiring the best and brightest that you can get your hands on!

So, what is it about what you do with your team that makes you unique? For your customers, it could be that you always return their calls quickly. Or that you have a process for onboarding that allows them to hit the ground running. For your investors, maybe you’re offering the chance to expand their portfolios in a particular direction.

3. What do we need to get there?

Are there gaps in talent, technology, or process that you will need to fill in the next few years? Have you thought about all the ways that business growth will require your team members to step up their games? Are you prepared to support leadership as they learn how their jobs and relationships will change?

One of the key aspects of a successful transition is being open to seeing shortcomings and accepting where creative solutions are needed. If you aren’t actively seeking constructive criticism along this journey, you are asking to be blindsided. So, start assembling that team of rivals and ask them to be brutally honest.

Think About What the Future Looks Like

One of the best pieces of business advice I’ve heard is “dress for the job you want.” This is another way to say put yourself in the mindset of where you want to be. When a business is transitioning to become a bigger and (hopefully) better version of itself, the same principle applies.

Here are some ways to put yourself and your team in the mindset of where you want to be:

Identify your audience: Now that you’re moving up, your customer set may change. You may be working with new clients who have larger budgets (and expectations that go along with those big numbers). Even your current customers’ perceptions will likely shift as you graduate from small business to large business. Identify their priorities and tailor your sales and marketing approach to their needs.

Shift your competitive set: As you grow, your competitors change too. This is particularly true when moving from a small business that benefits from set-aside budgets and contracts to a large business that is competing in a full and open market.

As you think about your new competitive set, take a good hard look at:

  • Your competitors’ current client lists, testimonials, reviews.
  • How they characterize and position their service and product offerings?
  • How they market themselves (e.g., website, public statements, corporate overview, social media, thought leadership pieces, etc.).

You aren’t doing any of this because you want to copy or steal their ideas. But to stand out from the crowd, you need to know what your crowd looks like. It’s also good to assess what your clients are used to seeing and hearing so that you can stand apart while communicating in the language they understand.

Also, consider the following:

  • Define success carefully. Consider the ideal goal, but also what, at a minimum, will count as a win. Be generous.
  • Do your market research. Don’t skimp on this step! Rushing into a big change without doing the right research sets everyone up for failure.
  • Understand your strengths and weaknesses. Transformation affects every level of your organization. Make sure you identify leaders early in the process and give them what they need to execute their specific missions. Also, look for any gaps in communication across departments. Strategize about how to create more cooperation.

Consider your proof points: Always keep in mind that business growth is an indication that what you’re doing is working. It can feel overwhelming in the process, but if you stick to what you know, that can really help you feel more grounded. Refer back to your track record of solid performance and great results whenever necessary. Also, work with your team to establish reasonable proof points to help you assess your growth roadmap going forward.

Be yourself: Finally, it can be easy to forget who you are in this process of reinventing yourself. So remember to continually reevaluate your messaging. Make sure all of your communications reflect your company’s credibility, self-worth, and core values.

If you are asking some of these questions about business growth or anticipate moving from a small to larger business in the future, my team and I would love to help with the transition. Contact us to schedule your consultation and find out more about how we enable your transformation.

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M&A issues

What No One Talks About in M&A: Culture Integration and How to Deal With It

We’ve talked about M&A before—the pros, the cons, where deals can go off the rails—but now let’s talk about what happens after the deal is closed. What comes next and what M&A issues come up?

Once your deal closes and the dust settles, it’s time for the real work to begin: integration. With any luck, you’ve already done some focused thinking about integrating the two firms. You’ve looked at M&A issues such as aligning billing systems, benefits plans, compensation strategies, etc. and you have strategies for each.

But what about culture? What’s your strategy for culture integration? If your reaction here is anything like, “A strategy for culture integration? Oh, the department heads will handle all of that,” you will probably want to keep reading.

Love and M&A Integration

M&A deals that work well are actually a lot like happy marriages. Yes, there will be some upfront work to do on both sides. But once you’ve skipped down the aisle after saying “I do,” you begin a new phase with its own set of challenges. This is the work of meshing together two lives into a cohesive, long term, happy union.

An M&A transaction can be a bit like courtship (ah, and you thought chivalry was dead): You date around for a bit, decide that you’ve found “the one,” get engaged, and then, you throw a heckuva wedding. And when you wake up after the honeymoon, reality sinks in…the thoughts start flying.

  • Thought Bubble #1: For better or for worse…wait, you didn’t tell me about that billing issue!
  • Thought Bubble #2: For richer or for poorer…what happened to the sales pipeline we reviewed?
  • Thought Bubble #3: ‘Til death do us part…why are all the employees leaving?

And as with any new marriage, there are logistical M&A issues that no one really considers before they sign on the dotted line:

  • How are we going to celebrate holidays? (Is everyone onboard and motivated by how we recognize and celebrate success?)
  • How should we handle joint finances? (Do both parts of this new mixed organization share the same fiscal priorities?)
  • How often do I have to see your family and friends? (What’s our customer relationship strategy?)

I’m not suggesting that the key to successful M&A integration is scheduling time for employees to do a bunch of trust falls and escape room activities. What I’m suggesting is that you consider how culture impacts any business transaction in the same way you consider how to maximize earning potential for shareholders.

Lessons from a Culture Integration Fail

Early on in my career, I worked for a multi-billion dollar firm. With much fanfare, we acquired a smaller firm that was highly respected and well-known in the industry for its creativity in “getting things done” for customers.

Within a year of acquiring the firm, the larger company had overlayed all of their big company processes and requirements onto the smaller firm—squashing the very flexibility and creativity for which they had been known (and for which we had acquired them!). Unsurprisingly, half of the employees were gone within 2 years…as were the customers.

While it’s easy to see the internal (e.g., from the employees’ perspective) impact of cultural M&A issues, we don’t often think about the external (e.g., from the customers’ perspective) impact. However, culture certainly does impact customer experience and this is especially true after a merger. For a case study in how NOT to complete a successful integration, check out the Starwood / Marriott merger. Yikes!

The hard lesson learned here: The reality is that human challenges are often harder to smooth over than system challenges. If you don’t anticipate the cultural challenges, it doesn’t matter how prepared you are on the business side. So, how do savvy M&A dealmakers address the human side?

1. Start early.

By early, I mean during due diligence. Yes, cultural fit is a deal maker or breaker! The very things that make an acquisition target attractive may also be the most fundamental to their culture…and the most different from your organization’s current culture.

Make sure that someone on your team is putting together a culture strategy prior to the close of the transaction. At a minimum, this strategy should include:

  • Key metrics for competitive landscape, demographic, and market trends to discuss with leadership.
  • Outlines for any necessary cultural change initiatives (Tip: stick with no more than 2 major change initiatives during the first year).
  • Ideas for creating employee buy-in and a sense of community.

2. Know thyself.

What is your vision for the joint culture? What changes after the deal? What stays the same?

Keep in mind that this doesn’t have to be all or nothing. There are no rules that say that everyone must conform to a single culture or that culture is immutable. In fact, allowing room for the culture to adapt is crucial for long-term viability.

Why are these firms merging? What is valued in each and how can we take the best pieces of our cultures and bring them together respectfully?

3. Focus on building credibility.

In most cases, there is a fairly steep learning curve that happens after a merger. Like moving from dating to marriage, we need to adapt to daily life and its new rhythms. How can we put in place mechanisms to better understand each other? How do we establish trust?

Remember that credibility is earned, not given. When a large firm acquires a smaller firm (especially if the smaller firm was once a competitor), there can be some apprehension. It’s important to warn employees of the large firm that taking a victory lap is not appropriate.

Past is not prologue. So the acquiring firm should look to create the right environment to nurture a bright future and bring the new acquisition into the fold. This will require transparency in sharing plans, following through, listening when challenges are raised, and addressing the concerns of everyone.

This is a key building block for #4.

4. Communicate.

Communicate early and often. Key leadership (ideally those with credibility) should share the aspirations for the combined entity in a clear, straightforward manner and acknowledge that integration won’t be easy. When talking about challenges, be specific. Show everyone that you are committed to making this work and addressing all M&A issues together.

Employees need to know what’s changing, why, when, and what will happen, both in the overall big picture, as well as on a day-to-day basis. They need to understand what the merger means for them and what the new expectations will be.

Communicating is about way more than printing off new motivational posters with the company’s core values and firing off a few “rah-rah” emails. (GAH!!) Cultural integration requires a change management focus, leadership commitment, transparency, a willingness to listen (and integrate) feedback, and continued communication via as many channels as possible…even when you think you’re done, you’re not. Keep going. Like a marriage, you’re in this for the long haul.

Preparing for a big M&A deal in 2019? Check out our guide for working with a Communications Specialist.

The team at Audacia Strategies is ready to stand shoulder-to-shoulder with you as you make a smooth integration, both in terms of systems and culture. Contact us to learn more about how we can enable your transformation and help you avoid serious M&A issues!

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business goals

3 Big Investments We’re Doubling-Down On in 2019

January is a good month to take stock—or so my Marie Kondo-loving friends tell me. It really is a great time in the business cycle to think back over the past year, to consider what worked and what could have gone better, and to make business goals for the year ahead.

Here at Audacia Strategies, I’m feeling so much clarity around what types of organizations we serve and where we can add the most value for our clients. Now we can focus on thinking strategically about how to double-down on our biggest investments and accomplishments to bring even more value for our clients going forward.

Here’s a small window into our business goals for the coming year:

The Big 3 for Audacia in 2018

1. We became certified as a women-owned enterprise (WBE): It took the better part of the year to get the paperwork completed, filed, and to receive our certifications (one of our major 2018 business goals). But we are now officially a Woman-Owned Small Business or WOSB (in the eyes of the Federal Government). We are also nationally certified by the Women’s Business Enterprise National Council (WBENC) and received our CBE certification in D.C. We’ll receive additional state-level certifications soon.

Big InvestmentsThese certifications position Audacia to better support clients’ supplier diversity objectives, engage directly with federal, state, and local government initiatives, and support larger-scale projects with diverse financing requirements. Being woman-owned certified also gives us the opportunity to reach a broader audience. We are proud to participate in programs that support and encourage women to own businesses in industries where women have been historically underrepresented.

2. We helped our clients win new business: This is some of the most rewarding and satisfying work we do at Audacia. When our hard work and collaboration results in clients winning new business, there’s no doubt we’re delivering at a high level. This kind of feedback reaffirms that our systems and procedures are working.

For example:

  • We helped an EdTech client land 8 new clients in 9 months by reviewing the market and competitive landscape to develop their product launch strategy, message development, and activate an ongoing marketing strategy.
  • We helped a growing government contractor develop a message architecture and segmented stakeholder messaging strategy to leverage their government expertise to expand into adjacent commercial markets. As a result, they have already inked a strategic alignment contract with a major commercial provider in their space and are in discussions with others.
  • We prepared an established government contractor to attend their first investor conference in their 15-year history. Our team worked to develop investor messaging, (i.e., strategic rationale, value proposition, and investment case development) and an investor presentation for the firm. We trained leaders in Reg FD requirements and presentation delivery. And we equipped key executives to handle “live fire” investor Q&A.

3. We helped our clients get recognized for their innovation: Bringing an innovative product or service to market carries certain inherent risks. But having a strong team behind you to brainstorm ideas, challenge assumptions, and provide an additional perspective can mitigate these risks.

For example:

  • We developed the messaging strategy for an innovative nonprofit in the higher education space. Our client was highlighted as a key innovator in higher education by the U.S. Department of Education.
  • We supported the successful CEO transition of a 55-year old government contractor and the strategy to support the subsequent transformational realignment to more closely align the business with its strategic markets. The firm has achieved higher internal employee engagement and is ready to bring their refreshed message to current and new clients.

Looking Ahead to Our 2019 Business Goals

1. We will forge ahead with additional state-level certifications: This is key as Audacia looks to better support our clients as they, in turn, support their clients. Think: transformational systems implementations. This is not a new business area for us, but these certifications provide a new way for us to enable successful business transformations at all levels.

2. We will continue to support our clients biggest transformational moments/goals/ideas: In 2018 we had the opportunity to support c-suite transitions, mergers and acquisitions, new product launches, and new investor relations strategies. We also expanded and cultivated our network of business partnerships, so that in working with Audacia, our clients gain access to even more strategic resources. We’re going to continue that work in 2019 as we look to help even more companies get the biggest bang for their transformation buck.

3. We will show leadership in promoting corporate responsibility and effective crisis management: Now more than ever, our analyses show investors and stakeholders care about demonstrated success in corporate responsibility. It’s often difficult for firms to evaluate their own cultures and even more difficult to implement change without an outsider’s perspective. If this isn’t on the radar of your leadership, let’s get going and get you on track! This is of special interest for organizations eyeing mergers and acquisitions. Making a strong case in terms of the numbers, may not be enough for investors these days. We’re staying ahead of the game, bringing new service offerings in this area in 2019.

How are you looking to grow and transform in the new year? What big accomplishments and investments from 2018 are you doubling-down on? What business goals do you hope to achieve in 2019?

If Audacia can support you in your business goals, let’s find time to talk about your needs. Your first step is scheduling a 30-minute introductory call with yours truly. Let’s make your 2019 truly transformational!

Photo credit: Cathy Yeulet

successful M&A deal

Let’s Make a…Successful M&A Deal! 5 Keys to Landing A Deal You’re Proud Of

Deciding to embark on a merger or acquisition (M&A) is one of the biggest transformations during the lifecycle of any business. Thinking in terms of resources alone, your money, time, and credibility are all on the line here. To land a successful M&A deal, you’ve got to be on top of your game.

If you focus too hard on all that’s at stake, though, you may not be in a position to make the best deal. In other words, don’t miss the forest for the trees—go in with your eyes wide open. Although it can be nerve-wracking to jump into an M&A deal, keeping the below 5 key points in mind should help you get through the process with your nerves firmly intact.

But first…let’s consider what not to do

Pushing through a successful M&A deal like acquiring a competitor or joining forces with a powerful peer is invigorating. But what’s invigorating on the day you sign on the dotted line can quickly deteriorate into something akin to buyers’ remorse if you haven’t thought things through.

Here are just a handful of the mistakes we’ve seen get in the way of a successful M&A deal:

  • Companies WAY overpaying for what they’re buying
  • Leaders forgetting that cultural fit between companies matters just as much (if not more) than securing cutting edge technology or getting a contract
  • Too little too late: companies being slow to consider market shifts and jumping in too late to address their gaps with M&A
  • Not considering the bigger corporate story—big, expensive “surprises” that don’t obviously fit are a tough sell and put you on the defensive with investors, customers, etc.
  • Failing to communicate with all shareholders. Remember, those little shops can band together to become an activist consortium

To avoid adding to this list, consider engaging a team who can lead you through any necessary course corrections. At Audacia Strategies, our core competencies revolve around helping clients consider their bigger corporate story and communicating with shareholders when making big, bold moves like this. You can also make sure everyone checks her ego a the door, by considering the following:

5 Keys to a Successful M&A Deal

1. Deal Fever Is Real.

You and your team have spent late nights, long weekends, blood, sweat, and tears pursuing this deal. You have done all that great valuation work to come up with a fair acquisition price. And now, you’re at the negotiating table (you can almost hear “Eye of the Tiger” playing in the background). And, you’re bidding against other firms… and the price is going up, and up, and up. It’s very easy to get caught up thinking, “I’ll show them. We’re going to win this thing at all costs.” It happens All.The.Time.

Successful M&A DealThe reality is while it’s good practice to come to the negotiating table with a valuation range that you’re willing to pay, it doesn’t pay to start warping your analysis just to “win.” This is how companies end up with massive write-downs a few years after a deal when they can’t achieve the value they needed to make the price they overpaid work.

It may be obvious, but even large companies are susceptible to deal fever. Want an example? See also:

Why does this happen and how can you control for it? Well, the short story is: all business deals are closed by human beings and the decisions human beings make are often influenced by emotional and psychological factors. Executives on both the buy side and the sell side can get caught up in their perception of the company and the management, for example. So, if you feel tensions running high and fear that you or your team are losing touch with your real goals, don’t be afraid to step back from the negotiating table to catch your breath or even walk away from the deal entirely.

Ask yourself:

  • What are the stories we’re telling ourselves?
  • How can we challenge these stories to get to the real story?

And remember Dan Doran’s advice: “Value is analyzed. Price is negotiated.” It’s crucial that you build your own valuation model, one that you’re completely comfortable with and can explain to stakeholders if (or when) challenges arise. One of the worst things you can do is rely on a target’s (very pretty, but very likely) biased projections. Do your own research. Do the work.

2. Due Diligence Is A Lot Like Going To The Dentist.

It is not glamorous, but it is necessary. Due diligence can be the difference between a successful M&A deal and one that feels like getting a root canal. To make this work for you, go beyond the financials (after making sure they work and are coherent, of course!) to really understand the logic behind the deal on every level. You need to consider carefully the reality of your team’s ability to create (or “unlock”) value in bringing two (or more) firms together.

3. Customers Matter.

Once you have your head wrapped around the business valuation and the inner workings of this new mash-up of a business being born, you’ve got to think about relationships external to the organization. Get into the weeds about how strong the current customer relationships are and how they affect the bottom line.

Ask these questions:

  • How much of current revenue depends on repeat customers vs acquiring new customers?
  • What is the cost of acquiring a new customer?
  • How strong is the current business pipeline?

4. Get Real About Your Competition.

You definitely want to take a look at where your target stands when it comes to market share, revenues, and profit, but also dig more deeply. Keep in mind, you are proposing a potential shake-up of the market here. Even if they’re tough to predict, consider all the ways in which this bombshell of a deal is going to have significant ripple effects outward.

Ask these questions:

  • Where in the value chain is your target excelling? Failing?
  • What changes can you realistically make to capitalize on strengths or cut the dead weight?
  • How do they stack up against their peers?
  • How do you expect competitors to react to a combined firm?
  • Will you have the wherewithal to combat a price war for example?

5. The Problem With “Synergies.”

I can’t really remember if Professor Mariann Jelinek shared this pearl of wisdom with us on the first day of my strategy class at The College of William and Mary, but she definitely shared it early and often: “When someone says ‘synergy,’ hold onto your wallet.” Throughout my MBA program and even to this day, I think no truer words have ever been spoken.

As a buzzword, synergy is overused and honestly, a red flag in most cases. Like pretty wallpaper covering an ugly stain, “these teams have a lot of synergy” is a pretty-sounding way of saying very little. As easy as it is for deal participants to get caught up in the possibilities and truly, badly, deeply underestimate the time it will take to achieve whatever they’re dreaming of, it’s equally as easy to overestimate the value of both cost and revenue synergies.

In the rush to eliminate redundancies and expand market share, a lot of details can get overlooked about what the new procedure will look like. Slow down and think things through at each stage.

Ask yourself:

  • How are we going to make more money by putting two firms together?
  • Do we have a crackerjack post-acquisition integration team ready to put our plan into action?
  • Do we have a good sense of what might go wrong in this integration? What’s our worst-case scenario?

Yes, there is a lot at stake when you’re spearheading what could easily be the biggest deal in your company’s history. But you can handle it. You’ve done the work and now you’ve got these 5 keys in your pocket. So you’re ready to seal that successful M&A deal.

Have questions? Want to talk through your deal with an experienced team? Audacia Strategies is here for you. We’ve helped businesses successfully navigate M&A deals and other big transformations. And we’re fun to work with! Contact us at info@audaciastrategies.com or give us a call at 202-521-7917 to schedule a consultation.

Photo credit: kzenon

business valuation

3 Expert Secrets for Getting the Biggest Bang for Your Buck When Selling a Business (Part 3 in our series on Business Valuation)

This is the third part in our series on business valuation. In Part 1, we give you the rundown on public vs. private valuations. Part 2 discusses 5 key factors influencing valuation. This time we are bringing you an expert’s take on common misperceptions, how to get the biggest bang for your buck when it comes to selling a business, and who is likely to be involved in the deal.  

To punctuate our fall blog series on business valuation, we interviewed a friend of Audacia Strategies, Dan Doran, Principal at financial services firm Quantive. As an experienced M&A professional focusing on small and mid-sized privately held companies, Dan has seen it all—or at least, A LOT. He and his team support both buyers and sellers uniquely positioning him to be the voice of reason when it comes to transformative business deals. Check out our full interview here.

If your plans involve selling your business—even if retirement is several years in the future—you need to carefully consider the insights Dan offers here. So let’s look at Dan’s top business valuation strategies for sellers.

1. Think early and often about how to influence your business’s valuation.

In basic terms, business valuation is a snapshot of the health of a business at any given time. We already examined in greater detail how analysts and buyers determine what a business is worth. But value can be boiled down to three things:

  • Earnings
  • Growth
  • Risk

To influence valuation, Dan works together with owners to get them thinking early on about these three aspects of their business. One challenge he often runs into is that business owners tend to think about the worth of their companies only when they are ready to go to market or when an offer comes their way. But, says Dan, “this is actually backwards.”

If you want to get the best price, it’s important to understand how you can best position yourself in the market. And if you aren’t satisfied with your current position, you need time to make improvements before you’re ready to find a buyer.

In addition, there are a lot of reasons why someone may want to know the value of a business, besides being in a position to sell. “There are number of litigation reasons, for example,” says Dan. A business owner might be going through divorce or someone might have died making the value a probate matter. Then, there’s the transaction stuff: buying or selling a company, buy-ins and buy-outs, capital needs, etc. “For all these reasons, it’s important to get to an understanding of where the market will likely price an asset (i.e., the business) at a given point in time.”

2. Mind the difference between valuation and price.

It’s also important to remember that there’s a difference between valuation and price. In the simplest terms, valuation is an analysis, while price can be negotiated. So, what this means for you is if you use an expert like Dan he will build a valuation model to predict where the market would likely price your business.

Of course, any valuation is only as good as the facts and knowledge available. “There’s no such thing as perfect information,” says Dan. In every transactional deal, there will be an asymmetry of knowledge, meaning that buyers and sellers will have different perceptions of what a company is worth. The most timely example of this is Elon Musk’s tension with short sellers a few months back.

Here’s Dan’s take on Tesla:

“This was really a battle of information,” says Dan. “There’s an asymmetry of knowledge and investors in public markets are constantly trying to gain more knowledge to predict where they think price will go. So, Elon is in possession of more facts than these investors and his position has been that the stock is going to grow, whereas short sellers are looking for it to decline. It’s been a battle of information to try to manipulate that stock price.”

But perhaps the biggest lesson learned in watching Elon Musk trying to value (or price?—it’s a bit hard to label) Tesla at $420 per share is that bringing a neutral party to the table during negotiations can help. Regardless of whether Elon was fairly valuing his company, he had no buyers in the end. A good M&A process will have some competition and likely involve negotiations around not only price, but also the terms of the deal.

3. Get the biggest bang for your buck when influencing business valuation.

We’ve discussed in a previous post, how competitive the M&A market is and how important it is for business owners looking to sell their businesses to stand out from the crowd. Our conversation with Dan reinforced this point. With fewer businesses being passed down to the children of business owners, 80% of business owners need to liquidate their businesses to fund their retirements, which means this is a seller’s market.

But where does Dan suggest putting your resources to see the biggest ROI? Well, he says, it’s important to realize that when you have a consultancy like Quantive appraise your company, “essentially what we’re doing is creating a risk profile that becomes a roadmap for what is impeding value and what we should be fixing before we go to market.”

So, again, it’s important not to wait to value your company. You want time to follow that roadmap to improve your position before going to market. “The real question,” according to Dan, “is how do we begin to drive more value and return a bigger rate on this investment?”

To answer this question, you need to think carefully about who your buyer might be and think like her. While the majority of small business owners are baby boomers (65+), buyers are likely to be in the next generation. What do these buyers want? What do they care about? Why is your company a smart investment for them?

And recognizing that we all tend to overprice our own assets can help you adjust expectations. As Dan says, selling a business is really not that different from going to market with a house. “Everybody thinks that their own house is a special unicorn. As a business owner when we go to market we want to get the most for that asset, obviously. But the market is looking at your business relative to alternative investments.”

Thinking of your business in these terms, as one possible alternative in a sea of potential investments for a buyer, you’ll want to look at several key factors to help you stand out:

    • Timing: we want to sell when the company is in a good position and when the market is in a good position.
    • Value of the company vs. how it fits into your overall portfolio: if you’re in a position where you want to liquidate your business to fund your retirement, you’ll want to have these two numbers in mind: how much is it worth and how much do I need?
    • Be ready for the personal transition: Most business owners spend more time working on their company than doing anything else in their lives. So when they sell the company, they suddenly have a lot of time on their hands. You have to look in the mirror and figure out what you’re going to do with that time. Otherwise, what invariably happens is the week before closing people look for excuses not to close. Releasing control can be hard, so make sure you’re ready.

As challenging as it can be to sell your business (which, let’s face it, feels more like “another child”), if you start early, consider how to influence business valuation, and take the necessary steps, you will be happily enjoying mai tais (or another drink of choice) before you know it.

To make the whole process less challenging, it’s smart to enlist the help of experts early on. At Audacia Strategies, we talk a lot about how to differentiate companies in a really crowded field. We can help you negotiate the best possible price for your business. Why not contact us to set up a consultation? It’s never too early to start strategizing!

Photo credit: Dmitriy Shironosov

communications strategy

Congrats, You’re the Proud New Owner of a Business! Now What? Prepare for a Smooth Transition With a Strong Communications Strategy

We teamed up with Richard Phillips of Crossroads Capital to create a webinar guiding the smaller financial buyer eying the middle market. We’ve included the link to the full 60-minute webinar at the end of this article.

In a recent blog article, we discussed a communications strategy for turning buy-side challenges to your advantage when purchasing an existing business. Smaller financial buyers looking to get their feet wet in the middle market face stiff competition. But if you play to your strengths such as flexibility on terms and show the seller that you understand her perspective, you stand a good chance of making a smart deal.

Once that deal goes through, the fun really begins! Making sure the transition goes smoothly following a merger or acquisition is one of the most delicate communications situations in all of business. Getting this right calls for a strong communications strategy. So let’s talk about how to plan for a successful transition.

Key Questions

As you begin to develop your communications strategy for the transition, you will want to keep many of the same questions in mind as when you were deciding how to close the deal. At this point, you already have well-thought-out answers to key questions such as:

  1. Why this deal?
  2. Why your organization?

But now it’s time to think about repackaging your answers. Previously, you needed a strategy for winning over the seller. You wanted to talk about why your deal was superior to those of the larger sellers. You wanted to position your organization as an asset and key to the future of the business. Now, it’s time to think more broadly about selling the deal to additional stakeholders.

You’ll need to ask and answer the following questions:

  1. What does this deal mean?
  2. What’s next?

Each of the stakeholders crucial to making the organization’s transition smooth will want to know what the deal means for them. Employees will want to know if their jobs will be on the chopping block. Investors will want to know if their risk is about to rise. Partners and community members will want to know if they can work with you and trust you to keep the business engaged in their goals. And customers will want to know if they can expect the same quality product or service they have come to appreciate.

Transition Announcement

After you have thought through your best answers to the key questions above, it’s time to devise your communications strategy for announcing the transition. Here it’s important to come up with a plan for announcing the transition and key steps to those in the “inner circle” and a plan for announcing the transition to the public. Carefully coordinate these two plans.

Timing is everything here. If the deal gets leaked to the public ahead of letting key personnel, investors, and partners know about the change, you could have a PR nightmare to deal with on top of a transition starting off on the wrong foot. This can kill your credibility and it won’t be easily rebuilt. So do what you can to control the timing of your announcements.

Employee Communication

Employees play a huge role in making sure an M&A transition goes off well. Consider holding an all-hands, townhall-type meeting for employees where the old guard and the new guard come together to demonstrate solidarity. Explain what’s next and introduce new leaders and any exciting new initiatives that benefit them. Allow employees to ask any questions in this forum and invite further discussion to establish open lines of communication too. Taking steps like these will go a long way toward engaging employees in a positive way.

Investor Communication

You’ve probably already thought about how to introduce yourself and your organization to investors. Make sure KPIs, metrics, and milestones are part of these communications. Being mindful that you can’t use numbers to tell the entire story, the last thing you want is to get caught flat-footed during these first few meetings with investors. Remember that communicating with investors goes well beyond the initial M&A announcement. An ongoing plan should be part of your communications strategy going forward.

Partners and Community

Suppliers, distributors, and community partners also play an important role in any successful transition. Get out of the building and meet face-to-face whenever it makes sense. A firm handshake and steady eye contact will help partners put a name with a face and open the door to a strong relationship. Make sure you talk to your seller about any insider tips and tricks for dealing with business partners. Are there some partners who deal only in cash? Will having cash on hand give you key discounts that will increase profitability? Is there only one supplier in the state who can sell you a particular part in the volume you need?

Customers

Last, but certainly not least, you need to communicate with your new customers before, during, and after the transition. Even if you expect little to change on the customer-facing side of the business, you want to let loyal customers know about the acquisition. A strong customer communications strategy demonstrates that you aren’t simply paying lip service to the mission and vision of the business.

In this market, realize that many of the most loyal customers may have interacted with the previous owner of the business and may even think of her as part of their team. If the previous owner is willing to attend those initial customer visits or write a letter or heart-felt email about her decision to sell, this can go a long way towards winning over loyal customers and easing their transition. This helps you pragmatically too. Losing a significant number of clients immediately after the sale goes through does not look good.

Transitioning after an M&A deal is one of the most delicate communications moments new business owners face. Fortunately, the team at Audacia Strategies loves a challenge! We’ll jump in with both feet, roll up our sleeves, and get to work developing the right communications strategy for you.

If you haven’t heard Katy and Richard’s full 60-minute webinar, there’s no time like the present! You can check it out here: Succeeding as a Small Financial Buyer in Mid-Market M&A.

Photo credit: Cathy Yeulet