Malcolm Murray, Senior Business Manager explains, in the context of selling a business, why proactive marketing is important.
Q: Your recommendation is to sell a business proactively, and talk about ‘proactive’ marketing, what exactly does this translate to and how does it compare with other business sales approaches?
A: To understand what we mean when we talk about proactive marketing, you need only look at how you market and sell your own products and services. No doubt you tailor your marketing literature and sales approach to best promote the features and benefits which your products and services provide to users.
You define your market and through an appropriate sales and marketing mix whether telesales, advertising, sponsorships, conferences and exhibitions for example, you undertake deliberate actions to generate enquiries and achieve the desired result – to attract, sell to and retain customers. The exact same sales and marketing techniques used to sell any product or service successfully, we believe, must also be applied to selling a company. We deploy appropriate techniques to generate appropriate enquiries.
Traditional methods of selling businesses are typically very passive. A regular anecdote our clients share with us when they meet us for the first time is to describe their experience of investigating how to go about selling their businesses. Invariably they will have raised the subject with their accountant and some will also have spoken to brokers and other corporate finance advisers. The ‘advice’ they receive ranges from “Who do you think might buy your business?” and then being asked to compile their own list of potential acquirers, to “We know who the buyers are.”
In every case, the advice is limited by the capacity or willingness to undertake the exhaustive sales and marketing that is necessary to achieve the best possible result. This lack of effort to market a business at the front-end of the transaction means businesses either don’t sell or sell at prices well below their true value.
What advisers are often more equipped to do is handle the technicalities of the sale. Small wonder that less than eight percent of company sales reach a successful conclusion using this approach. The BCMS Corporate proactive marketing approach cuts right across the passive methodology employed by others.
Most owners of private companies, in our experience, recognise that they will only achieve the best price and acceptable terms, if they are dealing with the most appropriate acquirer. The objective of our thorough, proactive marketing is to simply locate the best purchaser in the first place. It is only after this that the focus needs to shift to the technicalities of the sale. Furthermore, finding the right buyer can have a profound effect on the speed and ease of negotiations.
Selling a private company is fundamentally not an accounting or legal matter, these do support the process but, first and foremost, it is a sales and marketing matter. Changes in traditional thinking are certainly required – absence of success using traditional methods makes that argument loud and clear.
To give you some sense of scale, ‘proactive’ in the BCMS Corporate sense means that via our own dedicated research team, which has access to our own unique database of acquirers and the best third party data, we initially identify an average of 230 prospective acquirers for each client company we take to market. We then speak with each one to qualify them and identify those with the most compelling strategic fit before meeting with the most suitable. By this stage we will have reduced the ‘pool’ to between 3 – 6 prospective acquirers.
There is absolutely no short cut to getting to this point if a business is to sell and sell at a price that truly reflects the value. The initial search for the acquirer has to be comprehensive and the qualification meticulous and uncompromising.
