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Business development and strategic plans

  • transition and exit strategies;
  • identifying suitable joint venture partners, merger, and acquisition targets;
  • organic growth strategies and investment advice.

Some businesses have been built around individuals and as they age, priorities change. The next generation may be reluctant to continue in the business or may lack the skills to manage and grow the business. And in some circumstances, there may be no heir apparent in the management ranks and a decision has to be taken on whether the captain stays with the ship or looks for a strategic exit.

And I have never seen a situation whereby an owner offers the business at a fair market value and its value is always overstated and sometimes significantly over valued. These conversations can be hard and sometimes potential buyers will walk even though the deal they propose is fair and reasonable. Which begs the question, what value do you put on your time and energy and even frustration, when you force a buyer to walk away because the price you are asking is unreasonable and then you have to start the process again? Everything has a cost and the opportunity cost you impose on yourself may be greater than the price you finally extract for your business. The clear anecdote is when someone trying to sell a house asks a price that is well above the market. If buyers do not engage, then there is a clear opportunity cost because if the seller met the market they would receive a fair market value and then use their capital to generate further income and/or return on their capital. By walking away the ego may be salved, although it may an unintended (and undesirable) financial cost.

Whether to stay or go is a complex question although the decision to quit may be jaundiced by cashflow and capital issues and/or staff problems. But if those issues can be redressed by some timely advice on strategic and structural issues and capital management, then the decision process becomes unburdened and can be made under less pressure and with a clearer mind.

But if the decision is made to exit the business and a suitable buyer and price can be agreed, then the owner and key staff would be expected to stay with the business for a certain period to provide a smooth transition for the new owner.

Growth can be achieved organically – through growing the existing products/s and market penetration or though mergers and/or acquisitions. Identifying suitable targets, approaching those business owners and establishing a value proposition that works for both parties has its own challenges but nowhere near the challenges of making what looks good on paper, work in practice. Unfortunately many matches made in heaven can end in ruin due to egos, culture clashes, different management styles, poor accountability, and overly optimistic expectations.

Bringing together two businesses is very much like a marriage – there is the honeymoon period, the dawn of reality and then the hard work but sometimes no matter the best intentions of both parties, there is sometimes the bitter divorce.

There is no way to guarantee that a target business will result in the perfect marriage, although with sensible and experienced advice, at least you will be better prepared to understand the potential pitfalls and how to navigate and avoid them.

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