Making Your Company Attractive to Foreign Buyers
By JoAnn Lombardi, PresidentVR Business Brokers/Mergers & Acquisitions
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Increasing globalization and a strengthening U.S. economy mean that more business sellers are looking overseas for buyers. Many foreign buyers, in turn, are eager for U.S. acquisition opportunities. These types of deals can be complex, opening the door for miscommunication. Anticipating challenges, however, can help smooth the way.
Appoint Cultural Ambassadors
Prospective foreign buyers may not only be unfamiliar with the ins and outs of your business, but also U.S. cultural customs, government regulations, and labor relations. You can position your company as a more attractive acquisition candidate and smooth the process by assembling a group of executives to serve as an "ambassadorship" to a prospective buyer.
Charge this task force by explaining your country's traditions, work practices, and regulations. This group might organize a series of meetings in which managers from both companies can meet and discuss such topics as work hierarchies, distribution of power and responsibilities, and even office layouts. Informal meetings will help unearth any potential stumbling blocks long before the two organizations formally integrate.
Participate in Due Diligence
Due diligence generally is a buyer's task. But foreign buyers likely will have their hands full trying to understand various legal and regulatory requirements. You can help keep the transaction moving forward by performing an extensive inventory of your assets. Draw up lists of tangible and intellectual properties and flag any potential issues, such as machinery in need of repair or real estate with potential environmental exposure.
Also, consider issues relating to human assets. Your HR department should compile a list of employees and determine if any of them might cause problems for an international buyer. For example, if you employ non-U.S. citizens, be prepared to explain their status - whether they're here on a work visa, or are in the process of obtaining U.S. citizenship.
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Adapt Your Business to Change
If you've achieved some success in your startup's first product, how do you keep growing? What should you do if an upstart gives your customers a product that delivers more bang-for-the-buck than yours? How do you know when the needs of your customers are changing and adapt to those changes effectively? How should you alter your startup's business strategy to take advantage of new technology?
I've seen startups use all kinds of strategies to stay ahead of changing customer needs, new competitors, and evolving technology. One CEO acted as chief customer service officer, visiting with each customer after the sale to ask for feedback and adjust offerings as needed. Another wrote press releases three years into the future to create a vision of what the company should be doing three years from now.
Both of these approaches have their benefits -- providing motivation to move forward and a clearer vision into the future. But what if your vision of the future is not the best one for your startup or your current customer doesn't represent your future target customer?
To tap into the strengths of some of these approaches while overcoming their weaknesses, I developed a six-step process to help entrepreneurs grow their businesses without boundaries.
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Start Your Exit Planning Today (Part 3)
By Ryan Jordan, Owner of VR Business Brokers Office in Calgary, Canada
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When it comes to exiting from your small business, there is great truth in the adage of ‘failing to plan is planning to fail’. So, what can you do today to get started on this crucial process so you can plan for a successful departure from your business?
I’d recommend that the number one thing you need to do is look at what a buyer needs to replace in your absence, and then craft your business in a way to make it attractive and accessible from that perspective. Take a good look at your role and what hole a buyer would have to fill in after you’re gone. That affects what ends up in your pocket at the end of a sale far more than spending all of your time trying to get your sales up 5% or cutting costs that could have unintended consequences.
A buyer sees the most value in a business like yours when there’s a manager or small team of key employees that are taking care of most of the day-to-day operations. This informs the potential purchaser that they can step directly into an owner role, and not an operational role. This allows them to devote their energy and planning to grow the business when they know that the pieces are already in place to handle it.
Do not fall into the trap of working 50-70 hours a week and then expecting a buyer to pay top dollar to take on your 3 different roles. Chances are slim that your trusted broker will be able to find a potential purchaser that is an exact fit for the skill sets of all the roles you’ve taken on. They will look at the situation as requiring additional hires to free up their time, and they will translate these additional expenses to a lower offer price for your business. Simply put, the business will be worthless to them that it is to you.
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Roll Up Your Own: How Selling Several Companies At Once Can Increase Multiples
“To get the valuation you want,” Chris Bouck told the owner of a home services company, “you need more size and scale.” Bouck, a principal of SDR Ventures, a lower-middle market advisory firm in Greenwood Village, Colorado, knew that growth would be hard for that business because its territory was limited by a franchise agreement with a national chain.
“What if I brought other franchisees into the deal?” the owner asked. Buyers will pay a higher multiple for larger businesses with more growth potential, Bouck replied, but he cautioned that orchestrating a deal with multiple parties can be very difficult. Undaunted, the owner spent 18 months convincing the six other franchisees and the franchisor to sell as a single entity. SDR arranged a sale to a private investor group at a significantly higher valuation than it estimated than any of the companies would likely have received on its own.
Few advisory firms attempt to sell multiple firms at once, despite the value created by this approach.
“When we did the first one, people looked at us askance,” says Scott Mitchell, a managing director at SDR. “There are too many variables, they said, and something is going to fall apart.” Nonetheless, after that deal, SDR saw an opportunity. “Creating value through consolidation is a private equity strategy as old as time,” Mitchell says. “We decided to steal a couple of plays from their playbook and create more value on the front end for our sellers.”
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Golf Cart Sales, Rental, and Service Provider
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Great opportunity for mechanical, niche, & fun-loving business owners. For over two decades this firm has been the go-to shop for custom golf carts, cart rentals, and service. It is a well-known and respected company with a huge customer base from large Companies to individual cart owners, Universities, Property management companies, Apartment Communities, and Event planners. The firm serves all of NC with an arsenal of inventory and non-stop demand.
- Strong Cash Flow; Six Figure Earnings.
- The market’s premier sales, service, and cart rental provider for more than 2 decades.
- Limited competition, untapped demand for SERVICE.
- Loaded with hard-to-find ASSETS; comes with a Golf cart inventory that is impossible to find anywhere else.
Financial representations are a weighted average of the 2017 through 2020 financial statements recast from tax returns.
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VR Located in Lewisburg, PA Sold a Recycling Company for $5,800,000.00
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Diamond K Incorporated, with a lifetime of recycling expertise, operates a state-of-the-art recycling center in Scranton, Pennsylvania, serving communities of Dunmore PA, Scranton PA, and throughout the Northeast. With two pieces of highly sophisticated paper recycling equipment, warehouse space in excess of 125,000 square feet, a fleet of trucks, and over 100 trailers, their waste paper recycling facility was prepared to serve the community with unquestioned integrity and efficiency.
The Scranton PA facility sorts, processes, packages, and ships paper to many of the largest paper mills throughout the United States and Canada.
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Thinking of selling your business or looking for an established
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VR is The Only Remaining Founding Firm of The International Business Brokers Association ("IBBA").
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Have You Ever Considered Selling Businesses?
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