It's certainly possible and many people have achieved the magic number but for every one that does there are thousands who never make it even close and never quite work out why. So what are the common factors in a multi-million pound sale? Here are the top 10 factors that contribute towards achieving that goal.
1. Multi-Million Sales And Profits
It may be obvious but this is the traditional and still the best real way to achieve a multi-million exit. That's not to say it's easy, you need to work hard to get to one million's worth of sales and even harder to get to the next ten million. However, if you can achieve multi-million pound profits then your chances of a multi-million sale of your company are greatly enhanced, although still not guaranteed as it depends on the type of business you're in.
2. A Very Scalable Business
When a buyer is looking to acquire a business they are looking for the future potential that will come from that company. The price they pay is a reflection of what they expect the future returns from the business to be. This means that the greater the potential of your business the greater the value. And the most important element in that potential is how easily the business can grow, its scalability. If your business is wholly dependent on you doing all the work because you have very specialist skills then there is a definite restriction on how much the business can grow as you only have 24 hours in the day. If you have a product or service that can be easily replicated at a low cost (e.g. software) then the company can grow far more easily with limited additional expenditure. This makes your company much more valuable because it has far greater potential for growth.
3. Valuable IPR
Businesses that achieve high valuations often have very strong Intellectual Property Rights (IPR). These are the patents, copyright, trademarks and legally protected inventions and brands that the company holds. If you have intellectual property that is legally protected so that other companies can't easily copy it, then you benefit from scarcity value. If you have good IPR then it means customers have to come to you for the product or service, which makes what you're selling more valuable. Large corporations and VCs like to acquire strong IPR with a company as it gives a greater justification if a high price is paid and it gives them exclusive access to the rights. It can be tough to achieve the higher valuations you want without IPR.
4. A Desirable Customer Base
Sometimes a company is bought simply to provide the buying company with access to the customer base. The alternative is for the buyer to generate the sales and customer base themselves but this takes time. If you have a loyal customer base of regular, high spending, credit worthy clients, then the value of your business is significantly enhanced. A buyer will be looking to see what value they can get from selling their products and services to your customers and they will also have expectations of increasing the value of sales to those customers. And that could mean millions for them and for you.
5. A Hot Sector That's In Demand
This can be one of the best ways of achieving a high sales value but it's very challenging to get the right sector at the right time and find the right buyer. For all the Facebooks and Bebos that get it right, there are many thousand also-rans who didn't catch the market's imagination. It's not necessarily about being first but it's about being early, fast growing and getting attention from the right people.
6. A Great Brand
If your company has spent significant time and money generating a very strong brand in the market and your brand name is the first one that people think of in your sector, then your chances of a high price sale increase significantly. Brands have huge value to businesses as they can keep customers coming back, through brand loyalty, and attract new customers, through brand recognition. The brand may be the most popular or it may be associated with high value, bringing higher value customers with it. Again, it can be a challenge to create a really strong brand but if you succeed the value can be huge.
7. Exclusive Rights
If your company has the exclusive, legally enforceable, rights to a territory then they can be worth a significant amount to a buyer. If your competitors can't break into a particular geographic market because you have an agreement with a supplier that no-one else can sell their products or services in that territory then they will often want to buy you simply to gain that access. The alternative for a competitor could be that they have to ignore that whole territory or country which could bring down their own valuation. Whilst you should never over-pay (ideally you shouldn't pay much at all) for exclusive rights, they are well worth having if you can agree them.
8. Highly Successful Marketing & PR
Sometimes a business achieves a high valuation purely on what appears to be hype and promotion. This is about being in the public domain and getting noticed. It's certainly a lot harder to achieve a multi-million pound exit when no-one has heard of you. Of course, if you really want to get all the way to completing an exit you will ideally need to have a decent business to back-up the marketing, although it's been achieved before without much substance. Getting your company known through marketing and PR should be a natural goal of the business anyway, as it generally allows you to sell more if done properly. However, it can be a dangerous route to start marketing programs just to gain the attention of people who might want to buy your company and you should always carefully measure the effectiveness of any campaign.
9. A Great Balance Sheet
If your business has a very strong balance sheet, with lots of assets and not so many liabilities, then you can achieve a multi-million sale of the business just on that basis. Generally, this will mean that you have achieved one or more of the other options in this list already, particularly the high sales and profits one. Another way of looking at this is that you are less likely to walk away with a multi-million deal if you have a very weak balance sheet that is burdened with debt. If you've had to borrow a huge amount to get your business to its current state then when you sell you can easily find all the money just goes to pay back the debt and you're left with very little in the end. The stronger your balance sheet, the better your chances of a good deal that pays your millions when you sell.
10. Something To Plug The Gap In A Large Corporate
This covers a few of the previous factors because it really comes down to a large company asking themselves whether it would be best to spend the time and money to build up a customer base, brand, IPR and revenue stream themselves or whether it is better to just buy it ready made. Generally, this solution works for niche businesses that focus in a very specific area. Large companies will often conduct strategy reviews that look at how they are serving their customer base with a particular set of products or services. This will often give rise to a gap in the service offering that they will want to fill to provide a full service. If you have the business that fills that gap and you can get yourself in front of them, there can certainly be a multiple million sale on the cards.
Overall, all these factors will benefit your business whether you want to achieve a multi-million sale of your business, whether you want to create a great lifestyle business or whether you just want to create something you can be proud of. And on the way it will allow you to create jobs, boost the economy and benefit your local community. And if you sell for a large sum, just think of all the good you could do with that, along with maybe just a few small treats for yourself.
Top 10 It Company
Generation Y (the young men and women born after 1977) are different from other generations in many respects, from their political views to the careers they choose (or don't choose). Their presence in the workplace is truly making an impact, causing employers to worry, fret and scratch their heade, and asking, "What do I do to attract the 20-something worker, and once I have them, how do I keep them?"
When it comes to loyalty, the companies Gen Y works for are last on their list. These millennial leaders are ambitious, and if you can't find a compelling reason to stick around, they won't. They will either find a better job , or they'll move back in with mom and dad (hey...free rent and a packed fridge is not a bad deal after all, and moms and dads are allowing their 20-something age kids to move back home in droves).
Many employers are labeling Gen Y workers "demanding" and "self-serving" (not a smart move) and when you look at the fact that over 64 million workers will exit from the workforce by the year 2010, this puts employers in a talent deficit dilemma. The pools they have to dip from are these young men and women from ages 22-30. So, if you want to attract the young knowledge work, I highly recommend that you stop calling them names and start doing what you can to accomodate their needs, even if outrageous.
The remainder of this article will share with you some information about the companies who I believe are doing a great job in attracting Gen Y into their workforce and a few of the strategies they are using. As you read this article, do your best to resist the thought of "Well, Google, Intuit or Deloitte would never be my competition...we are worlds apart in location, size, budget and industry focus". While it is true that we are all not like Google or Apple, there is one thing that is true: We are in the age of the "young knowledge worker", and Generation Y is the most high-performing generation in the history of mankind with more information in their heads and at their fingertips (and they can multi-task), so they can perform a variety of tasks in many business domains and can live anywhere if the job and company cool. So, in today's world, any company is your competition, yet the big question is
"Will Gen Y be working for you or for your competition?"
Here's my top ten list of companies who are being successful with attracting the Gen Y worker. As you read through this list, don't try to bite off everything on this list. Simply ask yourself "How can I shift my business or organization to include a few of these strategies to make my company more attractive to the young knowledge worker?"
1) Google: Focus on Perks: Google is unfortunately (or fortunately) raising the bar for each company in the world in the war for young talent. According to a study done by the Great Place to Work Institute, Google is at the top of Gen Y's list of companies they most want to work for. Why wouldn't when you can gain access to perks including on-site dental and medical facilities, free breakfast, lunch and dinner on a daily basis at 11 gourmet restaurants, unlimited sick leave, and a global education leave program which enables employees to take a leave of absence to pursue further education for up to 5 years and $150,000 in reimbursement.
2) Intuit: Focus on a Rotational Development Program. Gen Y was born multi-tasking, so boredom on the job can set in quickly. Intuit has addressed this by offering a cracker-jack Rotational Development Program, allowing new recruits rotation programs in finance, marketing and product development every 6-12 months. This program not only keeps young workers engaged but prepares them for future leadership positions in the company.
3) Walt Disney: Focus on Internships and a Collaborative Culture. Disney has a rock solid internship program for college students, which includes college credits for the colleges they partner with, which gets young leaders committed to the company before they graduate. Disney is also built on a foundation of a diverse and collaborative culture, and Generation Y was born playing on teams made up of members from all cultures and walks of life. The sense of camaraderie makes Disney attractive for Gen Y, because it breeds a familiar sense of teamwork.
4) Deloitte and Touche: Focus on Leadership Development. Generation Y is very attracted to all aspects of learning and development. They have been raised on a diet which includes a combination of personal, leadership and team development. Deloitte and Touche have therefore designed a state of the art leadership program called the Future Leaders Apprentice Program (FLAP), and new recruits are immediately eligible for the program. Deloitte is also offering a top flight coaching and mentoring program. Because Gen Y has been coached since age 5, they are saying that the coaching and development programs offered by Deloitte are two of the main attraction points that has them stick around or return later in their career.
5) The Peace Corps. Focus on Saving the World. The pay is not so great (as a matter of fact, most Gen Y leaders say it's lousy), but they are willing to sacrifice pay in order to do meaningful work on a global scale, to work and live in another country where they can become fluent in a new language and to toughen up mentally and emotionally by doing hard work with long hours. Generation Y sees companies who are making a significant contribution back to their communities as tops on their lists for future employment. Teach for America is another hot and growing company that allows emerging leaders the opportunity to teach in failing school districts...another approach to "making a difference" in the world.
6) Lockheed Martin. Focus on Continuing Education. Gen Y is all about knowledge acquisition and this aeronautics and space company has hit the nail on the head with 20-something recruits by offering a maximum of $7500.00 annual for education reimbursement and full graduate school sponsorship for junior level employees.
7) L'Oreal USA: Focus on College Competitions and World Travel. If you have not noticed this lately, Gen Y LOVES a competition, and they are certainly keen on world travel. You only have to watch American Idol, So You Think You Can Dance or America's Next Top Model to verify this. L"Oreal has latched onto this idea with its L'Oreal Brandstorm Competition, providing college students the opportunity to compete by putting themselves in the shoes of a L'Oreal Brand Manager. The competition allows emerging leaders the opportunity to analyze consumer trends while developing a top of the line marketing and advertising campaign for L'Oreal. The winner receives a trip to Paris and the opportunity to interact with top L'Oreal managers, giving young recruits a leg up during the recruiting and hiring process. The competition alone creates buzz and a "cool factor" for L'Oreal, which is appealing to 20-somethings.
8) Southwest Airlines: Focus on Fun. If you have never flown Southwest, I highly recommend you do it just one time...just for the fun of it. Generation Y's mantra is "Live First, Work Second and Have Fun!", and Southwest's quirky but fun-loving culture makes it a great first stomping grounds for the young knowledge worker.
9) Nike: Focus on Fitness. Nike's campus is a prime location for Gen Y, who hits the gym at least 3-4 times each week. Nike is situated on over 170 acres, which includes a fabulous exercise center, playing fields and running trails. And of course, their "Just Do It" tagline inspires young workers to actually use these facilities rather than sitting at home in front of their computer or the tube.
10) Apple: Focus on Simplicity. If you have visited an Apple store lately, you will notice that you will be greeted by a young man or woman under age 30 at the Genius Bar. Apple is filled with Gen Y employees. The reason? Apple makes things simple. In a report by Outlaw Consulting, Apple won the number 1 loyalty spot for Gen Y, because their products are as "stripped-down and unadorned as possible" (According to Outlaw Consulting). To be simple means convenience and speed to the multi-tasking Gen Y crowd. This audience is also highly dedicated to saving the environment, the concept of excess means that the environment may be harmed even more. Gen Y is therefore choosing to work for companies like Apple whose positioning is dedicated to the greening of our world.
Both Andy Warren & are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Andy Warren has sinced written about articles on various topics from Family Concerns, Finances and Debts Loans. Andy Warren is the Managing Director of Marshall Keen Ltd. He is a chartered accountant and successful CFO, FD and entrepreneur with extensive experience in M&A, Corporate Finance, Business Growth and Exit Strategies. Marshall Keen. Andy Warren's top article generates over 18100 views. to your Favourites.
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2008 Economic Stimulus Rebate Lastly, although I dont advocate market timing, Id put new 401-K and IRA contributions into cash for the time being. Cash is king in times like these