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strategic planning

How to Crush Your 2020 Goals: The Lessons I Learned from a Chaotic 2019

If there’s one thing I learned about myself and my business in 2019, it’s that strategic planning saves lives. Really! 2019 might go down in history as being one of the most chaotic years for my family and my business. And yet, we’re all still here and thriving and business is better than ever.

Much of our success at Audacia Strategies is due to strategic planning. So as I look at the year ahead, I’m considering once again what investments I can double-down on and what needs to change. The challenge is how to build a plan that strikes the right balance between ambition and practicality. Read on for my 2020 insights!

Business Successes in 2019

  1. We added a certification for the state of Maryland as a Minority Business Enterprise (MBE): In addition to receiving our CBE certification in D.C. in 2018, we filed for and received certification from the state of Maryland last year. Passing Maryland’s comprehensive and rigorous certification program makes us eligible to win state-funded contracts. We are also nationally certified by the Women’s Business Enterprise National Council (WBENC)
  2. We supported our clients through big transformations: This past year, we saw many clients navigate executive transitions and corporate restructuring plans. While we tend to focus on how these transformations impact business, we often forget about the emotional impact of change. We witnessed both the vulnerability and the generosity of the human mind during the pivotal moments of 2019. Audacia was honored to be a part of ushering so many new clients into a bright future. 
  3. We saw the value of “radical candor” playing out: When it comes to client relationships and crisis management, what you say is often less important than how you say it. Okay, perhaps both are equally important. But my point is that communications is about more than the words you use. If a situation calls for you to speak truth to power, you’ve got to find the courage to speak your truth. Otherwise, you could be letting down your client or your team or yourself.

At Audacia, we pride ourselves on walking the fine line between diplomacy and radical candor.
This is one of our guiding values and I’m proud to look back and see how many times we chose this value over the “easier” path. 

Audacia’s Strategic Plan for 2020

  1. We will become certified as a women-owned enterprise (WBE) in Virginia: We have built a reputation for being a firm that supports our clients’ diversity initiatives and we are happy to qualify as a supplier for larger-scale projects with diversity thresholds. As we expand our reach and grow with our clients, we are excited to see what new opportunities arise. Our arsenal of certifications will continue to multiply in 2020.
  2. I will be scaling Audacia by continuing to invest in my team: I’ve been strategically growing my team throughout the years and I have awesome people backing me up. Now, as a team, we’re ready to take ourselves to the next level and take on even bigger and bolder client challenges (I’ll talk more specifically about scaling my team in a future blog article). This means, among other things, investing in replicable processes and investing in the right systems to keep us in synch. This is not just the “Katy Show” anymore!
  3. I will be better at managing technology and its impact on my life: I bet we all could benefit from making this one of our New Year’s resolutions (here’s a resource to help you think about implementing your own “digital diet”). Technology is wonderful in so many ways, but it can be a distraction if we don’t use it to support our intentions. So, I’ll be looking for ways to be more focused at work and more focused during family time. As the twins grow, I know how important it is to set these boundaries. For starters, I’ll be creating defined “lights out” and “offline” times at home. What about you? Are you with me?
  4. More of the above: 2020 will bring more clients facing big shifts in need of Audacia’s special blend of tough love, enthusiasm for getting sh*t done, and honest, candid feedback. Stay tuned for all that we’ll be cooking up for you throughout the year!

Here are 3 tips for crushing your 2020 business goals:

Include your senior team in your strategic planning process by sitting down with your team to discuss the following three practical ideas.

1. Be ruthless about your successes and failures.

It’s tempting to leave Q4 2019 in the dust and let everything that happened in those last three months fall by the wayside in our excitement to look ahead. Don’t give yourself a pass, though. Instead, focus on the 3-5 biggest successes, so you can double-down on them in the next 90 days and capture the 3-5 biggest lessons learned, so you can strategize about fixing whatever went wrong.

2. Back up your 2020 vision with strategic initiatives.

All successful leaders have this in common: they have a strong vision that they can communicate with others. The second part is really key: no matter how clear your vision for your organization is in your own mind, if others don’t see what you see, that vision won’t come to fruition. Make sure others know how to implement your vision by tying it back to specific strategic initiatives. To do this, divide your team into groups and have them brainstorm 3-5 strategic initiatives (i.e., focused projects) that will bring you closer to each of your annual goals. If they execute on their initiatives, then you’ll likely achieve your goals.

3. Build your communications plan.

The final step in strategic planning is communicating the plan to everyone in your organization. Get your team together and agree on some communications ground rules. Agree together as a group on what needs to be communicated throughout the organization and when. It’s great to kickoff the year with a town-hall type meeting to discuss your strategic plan. But what happens after the dust settles? Do you have a plan for managers and leaders to meet with their smaller teams to talk about how their units fit into the bigger picture? Do employees understand how their work fits within the broader strategic plan?  

Looking at your year, what are the biggest shifts you anticipate making? Can you start planning for those shifts now? Would enlisting the help of Audacia’s team of experts help you attain any of those audacious goals

Schedule a consultation and let’s start brainstorming your transformation strategic plan today!

Photo credit: http://www.monkeybusinessimages.com/

business communications

The 7 Deadly Sins of Business Communications: How to Stay Out of the Marketing Rat Race

For brands—as with celebrities, politicians, and CEOs—scandals and PR nightmares, like the Airbnb scam that recently came to light, are nearly impossible to hide from today’s connected consumers. As a result, the best approach to business communications is operating with transparency and trust.

This poses a challenge for marketers: how to navigate the trends, meet customers where they are, and ensure the messages being communicated are genuine and in alignment with their brand’s core values. The challenge is all the more difficult when we consider marketing as an all-out arms race where brands compete to showcase their products and services. 

Yes, it’s easy to get caught up in the rat race (with apologies for the mixed metaphor). So, let’s talk about how to stay out of it. The rewards will be waiting for you. When firms make an effort to avoid the seven deadly sins of business communications below, they often find customers do the marketing for them.

1. Pride – Lack of consideration for or understanding of your audience

We all know people who make everything all about themselves. When pride reveals itself in an individual, we distance ourselves from the individual. When pride reveals itself in a business, we tune out completely. 

To avoid the sin of pride in business communications, show your audience that you are listening. Do your research. This is Communications 101. But I get it. When you’re under pressure to respond to a crisis or you need to get your marketing campaign up and running yesterday, it’s tempting to believe that you know best. 

PRO TIP: Remember, the failure to hear your audience could easily spell failure for your firm.

2. Envy – Trying to ‘copy and paste’ another organization’s communications strategy or message because, hey, it worked for them

Whenever we’re developing a communications strategy, it’s natural to draw inspiration from other organizations. But remember that your organization, your stakeholders, and your situation are unique. If you simply borrow from what you see competitors doing, you risk missing out on the authentic connection.

And with all the data available to anyone with a website and a little ingenuity, there’s really no excuse for firms not to attempt some form of targeting and personalization. Of course, you’ll want to use caution here. Personalization can go too far. Make sure you don’t cross the line trading authenticity for ultra-creepy.

PRO TIP: Instead of ‘copy and paste’, try ‘customization and personalization’. 

3. Gluttony – Sometimes too much is just…too much

Strong business communications are direct and to the point. When executives, whether speaking to the internal team or speaking to the public, use extra words, include too many buzzwords, or belabor a point, they take the focus away from the core message. 

PRO TIP: Trim the fat by offering communications coaching or training for those in core leadership positions.

4. Sloth – There are few shortcuts in life (despite the astounding number of promised life “hacks” all over social media)

It’s hard work to step into the shoes of your audience (customers, employees, investors, etc.), to think about what matters to them, and to honestly consider how your message will resonate. But there’s really no getting around doing the hard stuff. 

Also, just because you put a lot of time and effort into building out customer personas, doesn’t mean your ideal customer will stay the same for decades. You need to constantly re-evaluate your message and tweak it for each audience, circumstance, or business goal.

PRO TIP: Good communicators make business communications look easy. But there’s nothing easy about effectively communicating with a variety of audiences.

5. Lust – It’s easy to fall in love with the buzzword of the week, the fancy communications tools, or new social media channels

It’s easy to become enchanted with shiny new things because we’re always looking for ways to take our companies to the next level. Indeed, I’ve referred to some business communications buzzwords (e.g., authenticity, customization, personalization) in this very article. And they can all be useful in some form or fashion, but without the scaffolding of a bigger strategy, they are simply distractions or crutches.

The next time you feel yourself lusting after the latest and greatest, pause and ask yourself: what’s in it for my audience? And, will it help me better engage with my audience? If the answers are ‘nothing’ and ‘no’, you may be leaning on lust to keep from doing the hard work of communicating (see above: Sloth).

PRO TIP: Forget about lust. Fall in love with buzzwords, fancy communications tools, and new social media channels only if you can clearly see how they help you better engage with your audience.

6. Anger – We’ve got a lot of conflict in our communication channels these days

While there is something to be said for playing to the emotions of our audiences to invoke feelings of urgency, anger is not always the most effective way to motivate action or provoke conversation. Generally, anger is more of a monologue than a dialogue and when every communication is perceived as angry, it all sounds the same. Conversation, engagement, and attention work better for long term progress.

Non-profit organizations may especially want to take note here. You can establish a sense of urgency, while opening the door to a path where you can move forward together. It’s important to display your passion for issues and causes you care about, but passion without direction results in lost opportunities. 

PRO TIP: Beware of anger, the sugar high of business communications. It might give you a quick hit, but it will evaporate quickly.

7. Greed – It’s okay to make an ask! But ask yourself who will benefit

It’s perfectly okay and even encouraged for every communication to include a call to action—heck, we all need a good call to action, particularly in business. But when the ask is aligned to the benefit of a few (or perceived to be for the benefit of a few) the conversation falls flat.

Additionally, remember that not every CTA needs to be “buy my stuff.” When you think about generating leads, try thinking in terms of how you can help your customers, rather than how you can get more people to click on your link.

All the SEO and marketing tricks you can buy won’t replace the success that comes from following these three steps:

  • Do what you say you’re going to do
  • When you say you’re going to do it
  • Exactly how you said you would do it

PRO TIP: Business is the ultimate team sport. If the ask doesn’t also provide a “win” or a meaningful trade (of knowledge, services, etc.), then it’s hard to elicit champions for your cause.

As your company grows and you become more successful, business communications will become more complicated. Don’t let success cloud your vision of what’s truly important in your business: your customers and your employees.

If you notice any of these seven deadly sins creeping around your business practices, it might be time for a change. Audacia Strategies is ready to step in. We won’t give you absolution or assign you penance for your sins, but we can put your business communications back on the path to transparency and trust. Let’s Talk!

Photo credit: https://www.canva.com/robertkneschke/

crisis management strategy

Your Crisis Management Strategy When You Need to Walk Through the Fire…and Keep Walking

Your company can’t seem to make money, your executives are constantly in the news for the wrong reasons, and your plane still isn’t flying. Yeah. It’s been a rough few weeks/months/years. 

Recently, I talked about what to do at the onset of a crisis, but what happens if you can’t immediately get a handle on the crisis? What is your crisis management strategy for living through the day-to-day of a crisis that seems to go on forever? The initial response with employees and customers requires getting to the ground truth quickly and relaying as many of the facts as you can, while taking action. 

Some of these same elements continue to be relevant in dealing with the fallout of a long term crisis. But what’s crucial for an effective crisis management strategy is being perceived as a company that is moving forward and not one hoping that maybe after enough time passes, everyone will forgive or at least FORGET. When facing damage from a crisis that just will not die, you need a plan for resolution and rebuilding.

Putting Out the Fire vs. Leading Through the Fire

One of the most challenging tests of a great leader is how they deal with a crisis. To pass this test, it takes two skills: knowing how to put out fires and knowing how to lead through fire. 

Every executive has to deal with surprises and being in business likely means you’ll have to put out some fires eventually. Especially as your company expands, those fires will seem bigger, or at least the potential for fires gets bigger. When it comes to putting out the fire of a PR crisis, the name of the game is regaining control. 

For example, you may remember that back in 2016, after the shooting in San Bernardino, the FBI demanded that Apple build a “backdoor” giving the authorities the ability to circumvent Apple’s data encryption and unlock any iPhone. In response, Apple’s CEO, Tim Cook, effectively took control of the story writing this letter: ”A Message to Our Customers.” Tim Cook knows how to put out fires.

However, there are times when you cannot expect to turn things around so quickly or the fires you thought you put out actually continue to smolder. In these cases, leaders must develop a crisis management strategy for continuing to lead even through the crisis. 

Here are some tips for moving forward through the fire: 

1. Continue to focus on transparency and the truth.

While it can be tempting to say whatever you believe will finally put an end to this crisis, resist the urge to “whitewash” the truth. Keep in mind that following your gut and making quick, impulsive decisions is not a valid crisis management strategy and won’t likely get you through this crisis any faster. Impulsive decisions often result in a further loss of power.

Instead, you’ve got to slow down. It will be uncomfortable to tell the truth and only the truth. The media, your employees, your stakeholders, and your customers will likely push for more information. This is difficult to deal with, especially day in and day out. But if you haven’t worked out all the details, do not speculate. Remember that you are engaged in a game of chess here—not rock, paper, scissors. 

2. Work with your team to identify how the firm is preparing to resolve the crisis and (hopefully) prevent another in the future. 

One way to relieve the discomfort of having to stick to the facts, when you don’t have many facts to offer, is to take action so that you have more to talk about. Of course, I’m not suggesting you take any random action that comes to mind. Again, impulsive decisions are almost never the right move.

Instead, work closely with your team to come up with new policies and processes that help your company is ready to move forward. If new training would prevent a similar problem in the future, take steps to implement new training programs as part of your crisis management strategy, for instance. Also, consider what would improve both internal and external communications in the future.

For example, Stanford University recently changed their leave of absence policy for students facing a mental health crisis in the wake of a class action lawsuit alleging discrimination. In her message to students, Vice Provost for Student Affairs, Susie Brubaker-Cole, said, “my colleagues and I have learned from our conversations with you, and our campus community is stronger because of your advocacy.” She went on to say, “together, we are making significant progress, and this new policy is a critical component.”

3. Do NOT stop communicating, either internally or externally. 

No matter what crisis management strategy you ultimately choose, remember to continue communicating as much as possible. Hiding away and hoping you can weather the storm without facing questions from your employees or the public will only cause more problems. 

Instead, keep your leadership visible and ready to answer questions. Have top leaders communicate internally through regular town hall meetings, Zoom meetings, pre-recorded videos, manager talking points, or even just walking through the cafeteria. 

By the way, communicating does not mean you have to take every accusation “on the chin,” but certainly continue to address the issue(s) with employees via your identified channels. Also, be sure to proactively offer appropriate updates to customers, regulators, investors, etc.

Communicate, both internally and externally:

  • What’s the latest 
  • What has changed 
  • What remains the same

Remind your leadership team not to say anything to employees that they wouldn’t say outside the company. This can be controversial, but it’s a reality. Memos leak. Video and audio can be shared. Be transparent and be prepared for what that means inside and outside the company.

4. Focus on sharing your strategy—value proposition. 

This final point is perhaps the most important aspect of any crisis management strategy: go back to the heart and soul of your company wherever possible. It’s a good idea to look at this crisis from a 360-degree angle. Remind your customers why you do what you do and emphasize that you are looking at this issue as only a blip on the radar. 

The point is not to dazzle or distract from the crisis, but to provide context about what your firm does, why, and how you remain committed to that strategy/mission. Ideally, any new processes, policies, actions are in support of continuing to advance the vision of your organization. With surgical precision, you are removing an imperfection and you will be stronger following this recovery. 

Keep this message close at hand, no matter how bleak things look. And always know that every crisis comes to an end eventually. I know that cliches sound so empty when you’re standing in the middle of the chaos and I know you’ve heard them all, but maybe you can take comfort in the words of one great American entrepreneur, Henry Ford, “Failure is only the opportunity to begin again, this time more intelligently.” 

If you’re standing in the middle of a crisis right now, don’t go it alone. Find your tribe. Gather your advocates. And build your crisis management team. Fear might leave you feeling paralyzed at the moment, but you can trust the experts at Audacia Strategies. We’ll help you find the right crisis management strategy. Chaos is our brand, so you can bet we know how to walk through the fire. Contact us and let’s get to work!

photo by Authentic Images

crisis response strategy

The 5 G’s for Walking Through Fire Without Getting Burned–Your Internal Crisis Response Strategy

We’ve all had those days. You know, the days where you are forced to pull your IPO and your CEO gets fired, or Congress launches an official investigation into your safety procedures, or your company is the target of whistleblower claims

No? You’ve never experienced a business crisis like this? Then, you’re one of the lucky ones. But keep reading because even if it’s not to the scale of the situations above, you may someday find yourself in a sticky business credibility situation. 

We’ve talked before about preparing a crisis response strategy from a PR perspective. Now I’d like to take a look at what to do inside a business. How do you handle your response with employees and customers?

How to Respond to a Business Crisis

When a challenge to your firm’s reputation arises, it’s important that you meet the challenge with a crisis response strategy not only for rebuilding your brand’s outward facing reputation, but also for addressing the crisis internally. You can’t expect your team or customers to read between the lines of your external messaging. Plus, you owe it to them to communicate beyond the “party line.”

As always, I recommend creating your crisis response strategy well before you find yourself walking into the chaos of a crisis. Consider the following 5 G’s as you build your framework:

1. Get to ground truth.

When a crisis happens, it’s important to keep two things in mind: you need to respond promptly and you need to respond truthfully. Surviving the crisis is all about how you balance these two factors. There can be a tendency to sacrifice truth for the sake of speed and vice versa. Ideally, you will avoid both pitfalls.

DO NOT SPECULATE. Your internal crisis response strategy should be informed by what you know, but you cannot wait to respond until you have absolutely all of the facts in front of you. So what can you do? Be transparent about what you know, where you are in the process and what you are doing. It’s important to acknowledge the credibility challenges (all of them), allow any legal processes to proceed, and identify and explain the steps you are taking.

2. Gather your team.

Even if you are the only person in your particular department, you will need a team. Whether you’re in finance, legal, communications, HR—as the saying goes, “look for the helpers.” Remember, it takes time to gather your team. So plan ahead and notify the relevant parties that you may call on them and what roles they will play in the crisis response strategy.

Once you’ve gathered your team, listen to them. It can be tempting to be reactive, but try to get a well rounded perspective before making any big decisions. Otherwise, you run the risk of overpromising in the hopes that you can make the whole thing go away. 

Instead, get a baseline. Get perspective. And give context.

  • Did your numbers tank this quarter? Focus on the data, not drama. Look at firm-wide numbers, the market, and get a line on how competitors are faring. You need a clear baseline before you can respond realistically.
  • Is there a government investigation? Get to ground truth (see above). Work closely with your legal department, but also encourage as much transparency as possible. The appearance of concealing or stonewalling is not a good look either inside or outside the firm.
  • Is someone accused of misconduct? Again, get to ground truth (see above). Also, consider re-emphasizing policies, values, and company culture within the firm (assuming they are not the cause of the misconduct).

3. Give employees the support they need.

Employees are most likely to end up on the frontlines during a crisis. They will be communicating with customers, other employees, regulators, etc. Do not leave them “swinging in the wind” as they try to clean up the mess they didn’t create.

Arm them with the facts and engage them in an ongoing and transparent conversation about what the firm is doing to repair or recover its reputation. Use the channels appropriate for your organization—email, text, newsletter, video, Slack, person-to-person meetings, etc. 

Meet employees where they are—during a crisis they should not have to search for answers. Part of your crisis response strategy should include resources for employees on the frontlines. Communicate with employees early and often.

  • Whenever possible keep the touch personal. For example, answer questions during a town hall, Zoom meeting, or video conference.
  • Create manager talking points ahead of time and distribute them as soon as you’re ready after a crisis hits.
  • Don’t say anything to employees that you wouldn’t say outside the company. This can be controversial, but it’s reality. Memos leak. Video and audio recordings can be shared. Screenshots can end up in the wrong hands. Be transparent and be prepared for what that means inside and outside the company.

4. Go on the offensive with customers. 

If the crisis impacts customers directly or has been/will be in the press, go on the offensive and own the issue. Rather than trying to totally control the crisis, though, let your mindset be one of getting your version of the facts out first. Again, make sure you explain to employees what your crisis response strategy looks like with regard to customers. 

Keep in mind, this doesn’t mean sugarcoating anything. Be transparent about next steps and honest about the potential impact (if any) on clients. Also, be sure that your customer communications are consistent with employee communications. As you consider these messages, your tone may differ, but the overall message should be consistent. The same goes for investors.

5. Grant trust. 

Follow the above 4 G’s and this last G should come naturally. When you create your crisis response strategy ahead of time, you’ll have the luxury of being able to fallback on your process. In the midst of a crisis situation, when it feels like everything is burning all around you, don’t underestimate the power of being able to trust in your people to execute on your process. 

How can you be so confident? Well, the confidence comes from having a strategy, knowing your audience, and believing in the human response to truth-telling. There’s a lot to be said for a company that owns up to mistakes and expertly pivots when crises arise. 

Whether you’re facing a small-scale crisis or a crisis of epic proportions like those recently faced by WeWork, Boeing, or GE, it’s helpful to remember other leaders have walked through the fire of chaos themselves. As Abraham Lincoln—no stranger to facing a crisis—once said, “I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts.”

At Audacia Strategies, we’re no strangers to facing a crisis either. We’ve walked with our clients through the fire using the 5 G’s and we can help your firm develop the crisis response strategy that works for you as well. Schedule a consultation so we can talk about your needs.

Photo credit: Rawpixel

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

inspiring

Reading, Listening, and Watching—What I’m Loving Right Now

It’s beach season. If you’re lucky enough to get some R&R this summer, I bet you’re reaching for something inspiring like a good book, your favorite podcast, or a binge-worthy T.V. show to watch. Me too! So I thought it would be a great time for me to dust off this occasional blog feature.

reading listening watchingHere’s what I’m up to in between (and sometimes simultaneous with) feedings and snuggle time with my favorite twin babies:

Reading

Educated: A Memoir

Okay, I’m about a year behind in reading this 2018 bestseller, but WOW am I glad that I did. In case you’re behind, like me, Educated is the memoir of Tara Westover who was kept out of school by her survivalist family. Westover was 17 the first time she set foot in a classroom and went on to earn a PhD from Cambridge University. It is a story of family, loyalty, reinvention, grit, and so much more. If you need a great, inspiring, page-turner for your travels this summer, this is it!

Mary Meeker’s 2019 Internet Trends Report

333 slides. Yup. 333.

If you’re reading this blog article, then you know that I prefer short and sweet presentations. But this is an exception. Meeker has been providing in-depth analysis of the trends driving the Internet for over 20 years. Don’t think of this as a presentation—think of it as a masterclass on market analysis. Interested in internet usage? Use of data? How industries such as education and healthcare are transforming? It’s all here. So pour yourself a cold beverage and enjoy. I bet you come away with several inspiring “ahas!” I certainly have.

Listening

Business Wars

I’m not a fan of comparing business to military conflict. But if we set aside the title of this podcast, we get awesome behind the scenes stories of some of the biggest business competitions: Anheuser-Busch vs. Miller, Netflix vs. Blockbuster, McDonald’s vs. Burger King. You get the idea. Each season has seven episodes digging into the history of the competition. History is always the best teacher, right?

Broken Record with Malcolm Gladwell

Honestly, this podcast had me at Malcolm Gladwell, but Malcolm Gladwell PLUS interviews with some of the most fascinating personalities in music? That’s my jam. (See what I did there?) In this series, Gladwell interviews a diverse array of singers, songwriters, and producers. Still not convinced? Take a look at this short list of examples: a two-part interview with Questlove, a discussion with Pentatonix, a conversation with Vampire Weekend. Great listening for your commute or walk around the neighborhood.

Watching

The Inventor: Out for Blood in Silicon Valley

As I mentioned a few months ago, I devoured another of 2018’s best sellers, Bad Blood, a real-life thriller that charts the rise and collapse of Theranos, the multibillion-dollar biotech startup that flamed out spectacularly with lawsuits, federal investigations, and possible prison time for key executives (the jury is still out, literally). The Inventor is based on the book and incorporates interviews with key players and actual footage from the company before its collapse. It’s an incredibly compelling HBO documentary that reminds us all that businesses are run by people…and all their flaws.

Game of Thrones: Season Eight

No spoilers here, but let’s just say that I’m still processing the final season of this iconic series. Anyone else? Whether you love or hate this last season, the energy and excitement around this series prove that there is still an appetite for good writing. Of course, with GOT wrapped up now, I need a new series. I’m ready for the next season of The Handmaid’s Tale (Hulu) and Big Little Lies (HBO). What else should be on my list?

I hope you have some incredibly fun stuff planned for the next few months. If any of your travels, lounging poolside, or playing in the waves leads you to discover something inspiring, please share it with me on social media (Twitter, LinkedIn) or via email. I’m always on the hunt for business tips, tricks, and motivation to move the needle at Audacia Strategies.

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best communications practices

“Chaos is Our Brand”—Takeaways from an Interview with Katy Herr, CEO of Audacia Strategies

Friend of Audacia Strategies and CEO of Quantive, Dan Doran, interviewed Katy about the advantages of running an “out-of-house” communications firm, best communications practices during times of transition, investor relations, M&A strategy, Amazon’s acquisition of Whole Foods, and much more.

Here are some of the biggest takeaways and highlights from their in-depth conversation.

1. Don’t Wait to Create a Communications Strategy

Organizations most often look for experts in investor relations and strategic communications during big transitions. For example, a government contractor might decide to take operations in a commercial direction or a firm may contemplate a game-changing merger or acquisition. Whether or not your organization ultimately decides to bring in a firm like Audacia Strategies to help during such a transition, the most important thing you can do is start strategizing early.

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.

Say your board is about to fire your CEO, when someone leaks the news on social media and all hell breaks loose. What do you do now? Dealing with this kind of challenge is never fun, but it is much easier if you have a strategy ready to implement. If you have a plan, you can stabilize the situation quickly and move past the crisis.

So, why look to an outside “hired gun” to help develop a best practice communications strategy?

Here are a few of the benefits of using an outside communications firm like Audacia:

  • 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.

2. Think About Who Your Stakeholders Are

Part and parcel of creating a winning communications strategy is thinking about who your stakeholders really are. Whatever you do, don’t skimp on the stakeholder analysis. Remember that at its core communications is about storytelling. And just as you wouldn’t tell the same story in the same way to your 4-year-old nephew as you would to your 85-year-old grandmother, you wouldn’t tell the story of your company in the same way to different types of stakeholders.

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

  • Employees
  • Financial stakeholders:
    • Public debt holders and ratings agencies
    • Private equity companies and banks
  • Community partners
  • Business partners (non-financial)
  • Strategic partners
  • Customers

3. Understand the Difference Between Marketing and Communications

It’s also important to realize that even if you have an internal marketing department or marketing agency responsible for communicating your message to customers, you may still benefit from enlisting a corporate communications or investor relations firm to help communicate with other stakeholders. We see both marketing and communications as valuable tools for building relationships.

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 experts, we provide you a strategy leveraging communications best practices honed over many transactions, crises, and change events.

We look at how individual aspects of the business including operations, business development, human relations plans, contracts, real estate holdings, etc. fit together to create a holistic picture of value and determine how to communicate that value to each stakeholder segment.

In addition, while many firms have annual strategic planning sessions, often leaders and employees are too busy putting out fires day-to-day to think much about the broader picture. By opening this conversation, we give firms the space to look at the competitive space and customer environment, for instance, and ask big questions about how their market might respond to their actions, how resources should be optimally redirected, and how to keep investors engaged through the transition.

4. Gain Fundamental Communications Building Blocks Regardless of Revenue

At Audacia Strategies, our team has worked to develop best communications practices for companies with billions in revenues and an established shareholder cohort and companies that are pre-revenue looking for their first round of funding. While the scale and scope are different, the communications needs of large and small firms are remarkably similar.

There are some “blocking and tackling” basics that hold when it comes to analysis, building customer relationships, and considering how to communicate your value to the marketplace. These are fundamental whether you’re pitching friends and family or venture capital firms.

Fundamental communications questions to ask:

  • How do we want to talk about this new capability?
  • How do we demonstrate knowledge, understanding, and awareness of the market we’re going into?
  • Are there legal, financial, or cultural requirements that we should keep in mind?

5. M&A Tips and Tricks

When it comes to M&A (mergers and acquisitions), Audacia Strategies can support teams in many different capacities. 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. For publicly traded firms, given the disclosure requirements, if you can tell the right story from the beginning, the whole process will be easier.

For example, when murmurs of Amazon working on a deal to acquire Whole Foods first hit the news, a lot of experts were skeptical. Whole Foods was struggling against some PR snafus and people wondered what Amazon really knew about how to manage a grocery store.

But look at what happened? As soon as Amazon acquired Whole Foods for $13.5 billion, Amazon’s market cap went up $14.5 billion. Essentially, the market paid Amazon to acquire Whole Foods. (If you’re curious to read more about Amazon, check out The Everything Store.) So, it’s interesting to see how the market will view M&A. It’s about risk, the ability to manage the risk, and telling the story of how this acquisition fits into your broader business strategy and culture.

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

M&A Pitfalls:

  • Companies that overpay: We have another blog post dedicated to this topic. Suffice 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.

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. To watch and listen to the 30-minute interview in its entirety, hop over to GoQuantive.com.

Catch the whole episode here:

For more information about how Audacia Strategies can help you own your message through big bold business changes, check out our one-page business overview. And if you’re new to the Audacia Strategies world, welcome! Please contact us to set up a discovery session so we can start strategizing about your best communications practices now.

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working with a communications specialist

Audacia’s Guide to Working With a Communications Specialist—Fabulous Business Transformations Begins With Smart Preparation

You have a glimmer of a change in your mind…a transformation. Perhaps you’re considering an acquisition, a new product launch, a fundraising round, or implementing a new, game-changing internal system. You’re excited, but you’re also practical. You know big, bold moves that lead to transformation require time, energy, and money.

What can you do today to set yourself up for success down the road? You need the A-team onboard to make this work and that means you need some external expertise—lawyers, financial specialists, technology specialists, and yes, even (or dare I say, especially) communications specialists.

Business TransformationsAnd if you’re extra ready to be wildly successful, you will want to be as prepared as the professionals you’ve gathered. So, here’s everything you need to know when working with a communications specialist.

Where to begin and how to set yourself up for success?

1. Find the right consultant early in your process.

Often, finding the right external talent takes time and effort up front. But keep in mind that you don’t need to save this task until crunch time. Just as you prospect for clients, you should always be prospecting for external talent. This way, when you’re ready to make that big move, you won’t lose momentum searching for the right consultant.

Have a conversation before you think it’s time. Most consultants are more than willing to sign a non-disclosure agreement (NDA) to ensure that you can have a candid conversation about your goals and expectations without the risk of giving away anything precious (And if consultants aren’t willing to sign an NDA, you should run).

In addition, starting the conversation and integrating the team early in your planning process allows you the benefit of their expertise as you build your strategy.  Working with a communications specialist early on can help you shape your plan to be even more likely to deliver the ROI that we all seek.

2. Ask for recommendations.

Prospecting for consultants can extend to prospecting for other business partners and strategists. Who has your consultant worked with before and are they willing to speak with you? I LOVE connecting my clients. Success stories sound best coming directly from happy clients and word-of-mouth is a great way to find those hidden gems who can really propel your business forward. Plus, you never know when clients might find some business opportunity together in their conversations. So, spread the love!

3. Consider company culture.

It’s also smart to consider company culture—yours and theirs. Diversity of thought and experience is critical, but if your organizational culture and theirs are 180-degrees different, chances are that you will have a hard time communicating effectively and that will make your interactions less efficient. Look for any clues about how working with a communications specialist could support or clash with your company culture and strategize accordingly.

4. Be ready for an in-depth conversation.

A good consultant asks lots of questions and really listens to your answers so that they can provide their best counsel. As advisors, our role is to hear you and help to accomplish your Big Idea. And, a good advisor will ask a lot of follow-on questions to get to the heart of a challenge.

For working with a communications specialist to be worth your while, it’s important that you can answer your expert’s questions to the best of your ability. So, you absolutely will want to treat every conversation like you’re entering the Shark Tank. Okay, it probably won’t be that bad, but be ready to have your assumptions challenged.

Remember, you can ask questions too. Do they have examples of their work available? A blog? Do they post on LinkedIn to share their knowledge? These are good places to start getting to know your consultant.

Also, don’t be surprised if that first conversation or two results in your consultant saying, “I don’t think that our firm is right for you at this time but you should really speak with ABC Consulting because they’ll knock this out of the park. I’m happy to make an introduction.” Don’t take it personally. This is how professionals do business.

5. Be ready to talk $$$.

Yes, I’m going there. Have a budget in mind. Be ready to discuss that budget. Budget guessing games waste everyone’s time. Communicate your budget requirements and expectations upfront. With budget guidance, a consultancy will offer you a plan that will get you to your desired outcome in the most efficient way, while staying within the budget you have. It will also save you from wasting time talking to the wrong consultants.

By the way, this means more than finding the cheapest vendor. An inexperienced consultancy who is cheaper, but takes a longer time to reach your goal and requires more time to get up to speed on your company or market, may be more costly in the end. It might make better sense to hire an experienced consultant who can reach your goal more quickly, but with higher bill rates.

6. But don’t fall into the trap of thinking only about money.

On a personal note, I find that some clients spend a lot of time thinking about the finances of a transformative event, but very little time thinking about how they’re going to communicate this event to customers, shareholders, employees, etc.

It’s easy to get swept up in the new idea and believe that everyone will think it’s a great idea too. But the reality is that change is change. Not everyone is going to be onboard. So, the sooner you start to think about how to communicate this Big Idea beyond the conference room walls, the better.

7. Focus on the outcome, not the time needed to deliver it.

No, this isn’t consultant-speak for “let me charge you more.” This is straight-talk. I want you to be successful as much as you want to be successful and I really don’t want you to feel like every minute you spend talking to me will cost you money. By focusing on the business outcome, rather than on the hours, you’re holding the consulting firm accountable for the results within the timeline and the budget that you have.

8. Set realistic expectations for working together.

Working with a consulting firm is not a one-way street. Do not expect that your consultant will hit the ground running on Day One and come back to you when the project is over. The best way to get as much as possible from your advisors is through collaboration where both parties are taking an active role.

You will want to think of your consultant team as an extension of your team. Invite your consultant to be present on-site, get into the weeds with you, and get integrated within your team. That’s the only way they can get a deep understanding of the challenges you’re facing and, ultimately, identify the best solution. Without making such allowances, working with a communications specialist will be frustrating for everyone involved.

If 2019 holds a glimmer of change for your firm, make sure your team is set up for wild success. We’ve consulted on transformations from product launches to CEO transitions and everything in between. Would you like to know how working with a communications specialist could propel your work forward in New Year? Schedule a discovery session and let’s discuss!

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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.

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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