Re-Imagining Growth

Re-Imagining Growth

By Duncan MacPherson, CEO Pareto Systems
paretosystems.com

Taking Enterprise Value Seriously

You're taking all aspects of your enterprise value seriously. You've got a fundamentally sound business. The metrics are impressive. Client loyalty, longevity and engagement are measurable. The EBITDA is strong. Your fee-worthiness is undeniable. You have tidy books, documented procedures, a sticky staff and IP with meaningful intrinsic value.

Maybe you should just sit on that, enjoy the ride, and wait for a buyer down the road who meets your criteria, while paying you 6x rather than most of your competitors who get 2x?

Sell and Stay

Ted Jenkin, a serial entrepreneur in Georgia, actually helps people achieve that. Jenkin is a fee-for-service professional himself, who now also assists others in maximizing their exits - many of whom sell and stay. In many cases, the lead sells all of or a portion of their business on the condition that everything remain intact as they take some money off the table. Liberated on many levels, the lead has never been more motivated or effective.

There are entities that will buy "your life's work" as an asset acquisition but don't want to disrupt the mojo.

What Do Buyers Want?

If you get to the point where you say, "it's go time" on the B-to-B model and you're confident in your B-to-C IP and adoptability, the next things to clarify before you go to market are your hook and your B-to-B process.

The hook itself has nothing to do with how great you are. Potential opt-in candidates will figure that out for themselves as they go through your fit process. The hook has to be all about them and what they want.

There are far more buyers than sellers, and your mindset has to be relentlessly focused on professional contrast and professional scarcity through your entire cycle. It starts with defining precisely what the ideal candidate wants from you.

Whether they want to:

• Sell the entire business to you and bow out
• Sell and stay (even on a consulting basis for a while)
• Sell you a remnant so they can grow down to 25 clients
• Draft in behind your process
• Outsource some of the commoditized work to you
• Acquire your IP and apply it to their business

Their motivations fit into these 3 categories:

• Liberation - they want to restore balance, simplify their life and pursue other FORM-related interests. It's a version of their own Blue Square.
• Legacy - they want their clients and worthy team members to be upgraded.
• Liquidity - they want to monetize fully.

Note: If all they're concerned about when you talk to them is money, that's probably a clue there will be some hair on this deal"and for that reason, it would not be a good fit. Yes, getting maximum value is important, but their "why" has to be addressed fully.

Will it Work?

To put the odds in your favor, alignment requires a variation of a fit process that has to be thought through well in advance.

Remember: You won't be chasing or pursuing anyone"you will be attracting with a compelling value proposition and process. Like every relationship, how you start it, position it and see it through will have a huge impact on how it will unfold over the long haul.

The Fit Process

• Philosophical - You see the world the same way. You're like-minded. They are wired to stewardship and are not hunter-gatherers. They see the merit of becoming a client of your firm themselves. They see the value of staying on as consultant"at least for a while. They are absolutely ecstatic about the precision of your process.
• Strategic - They are unwaveringly committed, even bordering on obsessed, about the well-being of clients. It's not a transaction. This is not a sale. It is a professional transition with a singular focus on elevating the client experience. No ego, all Legacy.
• Practical - The last thing to discuss is the economics. It's important but not the primary motivation or the deciding factor.

Create a Repeatable Process

To add predictability to your eventual encounters and interactions, we encourage you to capture and chronicle (Rule of Three!) the details of your approach for your first and second acquisitions.

It's a malleable format that you can use to ensure your acquisition and transition are well-defined, well-executed and repeatable. That process is incredibly valuable once it's built out and proven.

Learn More

Learn more about building value in your business with an eye toward monetizing your exit in our upcoming webinar.
Register at: www.paretosystems.com/webinars