To Market, To Market To…Find The Right Buyer!
What Is Package To Market?
Selling a company or preparing a "Package to Market," starts the process of building a marketing plan to help a seller find the right buyer for their business. This process tests a seller's creative side regarding who might be a buyer and how they can best show the additional value their company can bring that buyer.
Package to market is the process that brings the "why, what, when, and won't" of an owner's exit strategy as well as their presale planning valuation together to develop the company's marketing plan. This process defines what a seller needs to accomplish before the sale to get what they want. So, if the company baseline valuations are not congruent between buyer and seller, the seller will need to fill the gap by:
Revisiting when they want to sell
Determining whether they need to organically grow before they go to market
Or whether they should acquire another company to add more value to a potential buyer
This step of the sales process must align with why the seller built the company and what they feel buyers may want.
"In the end, a vision without the ability to execute it is probably a hallucination." — Steve Case
Define Your Unique Value
Think about the last time you edited your resume. You mirrored it to match the job posting, right? You highlighted your education, work experience, and accomplishments based on the job opportunity. For a different job opportunity, you'd take the same education and experience and present it differently. If you think like this when you're ready to package to market, you will attract more buyers based on their individual interests. This requires getting creative and innovative, and looking at specific markets and how you can match the buyer's interest.
When getting ready to package to market, I think of the spoon test I learned years ago. The spoon test explained marketing in the simplest terms. It goes like this, "See this spoon? If I invented it and only thought about it as something to pick up food with, people might ask, 'why do I need a spoon when I have a fork?'" The goal would then be to figure out who would specifically need a spoon. Who might that be? Someone eating soup, right? People who eat soup would want a spoon, so I'd want to sell my spoon to restaurants that sell soup. They would understand the value of that spoon over a fork. They would pay more for that spoon so their customers wouldn't spill soup all over the place. In its simplest form, that is marketing!
Your package to market is your spoon test. It helps you determine who might want your company. Use the spoon test logic when you start building your list of prospective buyers. If you don't know what type of buyer you'd like or why they might want your company, you might end up building a company that nobody wants. Or selling a company you do want to the wrong buyer for less value than it's worth, or completing a sale that doesn't align with your exit strategy.
Thinking like a marketer means looking at what your company currently can do and seeing how you can apply that to another market. It's figuring out which other companies might need your spoon.
Become An Industry Expert, Not A Generalist
Going after markets, or similar types of clients who would benefit from what you already do well and allows you to become an industry expert instead of a generalist. It also provides the potential for you to sell more products in more markets that are adjacent to the products you already sell and markets you already enjoy.
Once you establish yourself as an industry expert, you'll generate referrals not only among clients but among others who want access to your clients. Expanding markets and doing more of what you already do within specific industries will make you more attractive to prospective buyers. The ability to leverage your markets to drive the value up is a far better position to be in than having the price driven by the buyer.
Partnering with an advisor can help you realize a better sale. Not only should an advisor help find potential buyers, but they should also help you capitalize on your synergies; an advisor should know when the buyer is giving you the runaround and know when to drive negotiation points. The seller's responsibility, of course, is to know how to find the right advisor and ask the right questions of the buyer.
Think Like Amazon
To expand your list of potential buyers, ask yourself, "What else might my current clients buy?" The following questions can jumpstart this process:
· Who are my customers, and what do they currently buy from my company?
· Do I have groups of similar companies in the same industry?
· Can I sell the same types of products and services to adjacent markets?
· What do my clients need, and what would they buy that I don't produce now?
User experience is key. Anything that can make your buyers' lives easier or make your customers' experience more seamless is a selling point. Just look at Amazon. People use Amazon because the experience is easy. You can watch a movie, buy clothes, fill your Kindle, and buy a cell phone all in one place.
When it comes to adding services and marketing to your company, think like Amazon. Think about ways to expand the buyer's wallet share with your company. Sometimes this means adding new products or services. Sometimes it means acquiring a business or expanding your services into new markets.
Fill The Gap: Add Additional Value
The value a buyer places on a business is often less than what the seller hopes to get for the sale. That creates a gap that needs filling. You fill this gap by creating additional value for the buyer, which creates leverage for you.
Do It Right The First Time
Think about adding value before the sale and be sure it aligns with your exit strategy. Identify and create synergies for different types of buyers. Don't just look at companies in your industry; look at adjacent companies and what might they be interested in? For example, maybe you're a printing company. Do you expand to offer products and services that might be of interest to a marketing company?
Think about your company from your clients' perspectives. This can help position the company in the best light to a buyer. If you're that same printing company and print 100% paper-based marketing materials, you know that some of your customers will also need digital marketing materials and automated fulfillment to market their brands. That printing company could consider expanding its offering to provide print and digital materials to its clients, opening a vast market for potential buyers when that print company goes to market.
Because some buyers cannot make the leap between what the clients want and how the seller's company might meet that need in the future, the seller needs to fill that gap for the buyer. For example, a seller could find a unique and growing vertical that a buyer is interested in. The seller may have infrastructure that a buyer needs, which can help improve margins, thereby increasing their profits. That's always a huge selling point. It's incredible how painting a picture of what your company can do and where it can go gets potential buyers excited and ready to make an offer.
Because some buyers cannot make the leap between what the clients want and how the seller's company might meet that need in the future, the seller needs to fill that gap for the buyer.
Package to market is a creative process that requires a seller to have a vision for the obvious and not-so-obvious buyers that might be interested in their company. A seller must understand the process of defining what they need to accomplish before the sale to get what they want from it. This step of the sales process must align with why the seller built the company and what they feel the buyers may want. An experienced advisor can not only help you find potential buyers, but they should also help you capitalize on your synergies. The key for the seller, of course, is to know how to find the right advisor
If you need help preparing and marketing your company for sale or need help growing your company before you're ready to sell, contact Paradise Capital. Our team of experienced business professionals brings 50+ combined years of marketing, communications, finance, business planning, and acquisition services working with a variety of brands.
Ann Smallman, Partner at Paradise Capital and co-author of GrowNOW! Your Fast Path to Growth. With a background in business marketing and relationship management, Ann has worked with some of the nation's biggest brands and helped drive millions of dollars in revenue.
She prepares company packages for sale and manages the Paradise Capital sales process helps clients navigate the ins and outs of selling their company which lets her apply her marketing experience in positioning companies for sale.