Are you the Prey or the Prize?

Mar 18, 2024

I recently attended the Business Acquisition Summit, a three-day event brimming with insights on the art of acquiring companies. Throughout the event, we delved into what attracts buyers and the red flags that make them wary.

In acquisition parlance, there's talk of 'deal flow'—akin to a sales pipeline but for potential acquisitions. It's not uncommon for acquirers to evaluate hundreds, even thousands, of prospects before sealing the deal with the perfect match.

Like panning for gold.

In fact, the current market scenario echoes the fervor of the gold rush days:

  •  The surge of Baby Boomer retirements is flooding the market with businesses.
  •  A noticeable pivot from starting up to buying established businesses, now even a curriculum topic in prestigious universities.
  •  A burgeoning wave of acquisition entrepreneurship is unfolding, drawing both astute investors and opportunistic players into the mix.

...not to mention all the snake oil salespeople preying on unsuspecting business owners, trying to con them out of their companies for no money down.

Snake Oil

Keynote speaker Nick Bradley offered a great analogy on how sophisticated investors (and crafty snake oil salespeople) view business owners:

The Prize & The Prey...

If your business is The Prey—unpolished, financially erratic, operationally dependent on you, and lacking strong leadership—you enter negotiations from a place of weakness, leaving you vulnerable to lowball offers.

Conversely, as The Prize, you present a robust business model marked by steady financial growth, distinct competitive advantages, streamlined operations, and a dedicated team. This stance not only attracts but also incites competitive bidding among buyers.

When your business is viewed as "the Prize," you walk into the negotiation room, radiating confidence...feeling like a prize fighter.

You don't actually need to sell your business, but you will for the right price.

You're in a great position to negotiate.

The buyers see it (and the snake-oil paddlers too).

If you're the Prize, you understand value creation.

Prize Fighter


How to get your business fighting fit...

Define Your Endgame: Pinpoint your business's current value and establish clear objectives for the sale.

Determine your non-negotiable 'life-changing number' and strategize accordingly by eliminating inefficiencies, mitigating risks, and fortifying your business's backbone.

Be self-aware of your skill gaps and consider hiring specialists.

Remember, businesses turning over seven figures have a 20% chance of selling.

Surpass the eight-figure mark, and your chances jump to 70-80%. Scale before you sell, and watch your business value soar.

Decipher Buyer Motives: Grasp the mindset of Private Equity and sophisticated buyers.

Dedicate 12-36 months to address potential concerns, eradicate vulnerabilities, and solidify your business fundamentals, thereby preserving your valuation.

Unpreparedness can significantly reduce your business's value. Ensure your business demonstrates a high-value return to safeguard your asking price.

Command the Selling Process: Guard against the emotional exploitation often employed by seasoned buyers.

Arm yourself with knowledge, prepare thoroughly, and consider expert advice to navigate the intricate sale process confidently.

By adhering to these principles, you stand to navigate the sale of your business with informed precision, securing an outcome that aligns with your aspirations and rewards your years of dedication.


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