Future acquirer's will factor this into the valuation they place on your company
You’ve built and continue to lead a successful company that could allow you the potential one day of selling to a third party. When that day arrives, will an acquirer view you personally as being essential to the ongoing success of the business or will they see that you’ve built a team around you, allowing you to step away at time of sale? The answer to this question will have significant implications on how much the acquirer is willing to pay, even if they will be willing to pursue the acquisition at all.
Ask yourself these questions –
- Am I able to take at least a two-week vacation and not need to have frequent communications with my team back at the office?
- Do I have key managers in place across my company that I have confidence in the decisions they make on their own when I’m out of the office?
- Have I prepared and empowered key managers to make important decisions for my business in my absence?
- Are my key managers clear on what level of decision making authority they have in my absence?
- If customer issues arise when I’m out of the office, is my team capable of managing them effectively without me?
- Are top customers and suppliers willing and confident to work with key managers on my team in my absence or do they only want to deal with me?
- Are the innovations that occur in my company, such as launching new products or services or making meaningful improvements, all driven by key managers on my team and if I leave the company one day, these innovations will continue?
If you answered “yes” to all of these questions, then you have the potential for showing a future acquirer one day that your business can continue on successfully without your leadership. If you answered “no” to any of these questions, it’s important to get to the root cause. Being able to show that you’ve built a team that can operate the business successfully in your absence will be key to building the valuation of your company in the eyes of a potential acquirer. As we frequently comment, you want to be euphoric one day when you sell to a third party and your role within your company will be a critical factor of success in achieving such a desired outcome.
