In this article, Pepperjam CTO, Greg Shepard puts forward a variety of thought-provoking ideas including that entrepreneurs should be thinking about partnering early on with those they believe will ultimately want to buy their business. This is because day one is the day to prepare your exit. Partnering with the right people will help get you on the right path to an eventual sale. By planning ahead, you can put yourself in a much better position down the road.
The earlier you begin preparing, the better off you’ll be. partner with those who can help you achieve this goal. Those individuals will likely be key in helping you reach a successful sale down the road.
Shepard’s research shows that the majority of startups are hoping for an acquisition. In 2017, “mergers and acquisitions accounted for 93 percent of the 809 ventures capital-backed exits, yielding a total of $45.6 billion in disclosed exit value.” Knowing when to start preparing your exit is key, and Shepard’s research is a great place to start. Make sure to stay ahead of the curve. Keep an eye on the latest trends in order to make the most informed decisions for your business.
Entrepreneurs need think about who may acquire them at a later date. They should also build their companies in such a way that they are attractive for acquisition. In particular, startups will want to consider the possibility of being acquired by a larger company. This way, you can ensure that your business is in the best possible position when the time comes to sell. According to Crunchbase, exit opportunities frequently present themselves well before a company’s Series B funding.
Building Successful Strategies
In order to make your company as attractive as possible for a potential future acquisition, you’ll need to build successful strategies and hire the best talent. By understanding who your customer is and why your particular product is attractive to that customer, you’ll be well on your way to success. Make sure to keep your employees informed and up to date on industry changes. This will also be attractive to potential buyers. By preparing for an exit well in advance, you’ll ensure a smooth transition for you and your team.
You’ve done the hard work of building your company. You know your customers and you have the right team to support your vision. Now is the time to focus on companies that are most likely to be interested and construct an “optimal buyer pool” for when you want to sell. Finding this optimal buyer pool means finding businesses that serve similar markets and then making sure that your product, as well as your business model, both address an overlooked need within the existing customer base. Combine all of these variables together, and you’ll be more attractive for an acquisition. Being aware of what potential buyers are looking for will help you put your best foot forward and make the process smoother for all involved. By understanding what buyers want and preparing your company accordingly, you can maximize your chances of a successful exit.
Let Innovation Drive You
Shepard discusses the importance of innovation in startups. He also discusses how they can provide products or services that potential buyers are currently not providing to their customers. Additionally, he states that “Disruptors should seek out companies that are truly driven by innovation-perhaps those that have already established or partnered with innovative labs or accelerators.” By keeping innovation at the forefront, business owners can ensure that their company is in a good position to be sold to a potential buyer who values this trait.
Be aware of the day to prepare your exit. That means knowing where your company could fit within a larger organization and making yourself more acquisition friendly. By understanding this, you’ll be in a better position to maximize the value of your company and get the best return on investment for your years of hard work.