Will My Business Sell - Buyer's Wish List

Aug 19, 2022

By Darren Cherry

Recently we asked buyers of lower middle market companies ( Sales $5-$50 million) to describe the top two to three challenges they had to remedy in the businesses they purchased. Below is an overview of what we call the “BUYERS WISH LIST.”

Most buyers are looking to achieve aggressive growth goals. It is not uncommon to see a 2x sales goal (3-year timeframe). So, while the sales structure was sufficient for the “as is” model, it is often woefully inadequate for the buyer’s rapid growth plan. Here are some of the top shortfalls we discovered:

1.) NO HUNTING: Sales has morphed into Customer Service. Early reputational success created a “word-of-mouth” model where leads come to the team. This team does little to no proactive hunting.

2.) SALES BY OWNER: The owner is the MVP of business development. They are either the only sales resource or by far the best.

3.) NO PROCESSES: The sales reps use a “seat-of-the-pants” methodology. This process is rarely replicable and makes it incredibly difficult for a new sales rep to find success in less than 2-years.

Many owners have leveled up their team to operate the business for short periods, such as vacations. The needs of the new owner may be very different. Here are some top challenges:

1.) STRATEGIC: In many cases, the owner prepares strategy and makes strategic decisions in isolation. Here the management may not understand the factors behind the prior strategy. Or, even worse, may not possess the skills necessary to add value to the company’s next chapter strategy.

2.) CAPACITY: Another observation is when managers are near the peak of their abilities and may struggle to succeed in a larger company. Others may have only led their functional area for this company and lack an outside perspective.

3.) INTERPERSONAL SKILLS: Many times, the functional leaders in a company are the best performer. They may be very good at knowing what to do but struggle to develop others. In more extreme cases, they lack “people skills.” The prior owner often played the referee role.

These are examples where owners can make their business more attractive and grow their value. In most cases, more value results from an earlier start.

Owners should consider succession/exit planning as a component of their ongoing business strategy instead of starting when they are ready to exit.

Get in touch to talk through succession/exit planning.

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