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Ditch the Ego!

The perfect acquirer is better equipped to make a success of your business than you are. Accepting this fact is absolutely key to finding the perfect deal – and there are a number of reasons for it. The fundamental principle is that you need to sell into growth if you want to sell successfully. At the same time, you need your acquirer to know that is your intention. Many acquirers (in fact, most acquirers) will at some stage either value your business using a multiple of earnings or test their valuation using such a multiple. The multiple they use is directly related to the risk they perceive. The more you can reduce this risk, the more you can increase the multiple. Do not misunderstand this, though. Very few acquirers want to pay for future earnings; instead, they are convinced they will only pay for the past. However, the more attractive the future looks for them, the more they are likely to pay. Also remember that few acquirers want to invest in a business that is expected to grow by, say, 10 percent per year. They want to see it double or triple in size over the next few years. You need to find an acquirer who is confident that they will be able to achieve this kind of growth in your business.

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