It is very clear that we got the timing of the Voyager sale very correct. Of course we were lucky that we were in the dot com boom. We had however injected into the business some key new products and services during the initial 5 years or so that became very valuable at the exit ( eg Internet connectivity experience, our own national network, managed services business and ip telephony business ). Within the overall lifecycle of our business we had injected some key product and service lifecycles.
The Buyometer or Approachometer is a good indication of a sector that is building up a head of steam. When people ( other companies, M & A people, VC’s etc ) start calling you up you know that something is going on.
( However you have to be careful during this period because you can get pulled all over the place for meetings by people and they often come to nothing. Anyway to cut through a lot of discussion you only want to talk to people when you are ready to talk to people really.)
Remember however that when they were calling the bigger companies – as they probably were – you would not know about this. You would only know about it when the news of a sale broke – if it was publicised.
So you really need a view of where your company is in relation to your sector and the trends in it.
You have also got to be selling at a time when you are still on the upward trend of your company lifecycle. Far enough through it that you can show track record and improving results but not so far that the peak has been reached.
Of course you are actually trying to start a company that you can exit from when you are most of the way up your company lifecycle and the market is building into a new lifecycle that demands you as a component.
None of us have crystal balls but if you know your market sector you may be able to discern trends that will, probably, build into something in the future.
I don’t necessarily subscribe to the view that now ( the current economic climate ) is not the best time to sell. It depends on a number of things including where you are in your company lifecycle relative to your market lifecycle.
Obviously there are sectors that are booming at the current time and now might be exactly the time to sell. It also depends on the deal that you do to sell because when it comes to how you are paid for your shares you might decide to take some shares in the acquiring company aswell as cash. This extends the value of your business into a new economic period.
This blog post is a part of a series of posts describing The Sales Process – you can access the other parts of the series from the links below:
- Making the decision
- Alternative Options to an exit by trade sale
- Getting ready to sell
- Finding an M & A Adviser – The Beauty Parade !!
- Who/where are the buyers
- “The Teaser”
- Prioritising Interest
- The Sale Document – your greatest ever sales proposal
- Negotiations and Heads of Terms
- Due Diligence
- Closing the deal
- Objective Parties