M & A Rainmaker

I already had a top 5 position in a Google search for the highest ranking Digital Marketing Expert but that was with Pinterest which was sort of cheating

A few days ago I decided that it was time for a Plan B and maybe even a Plan C and time to put the Digital Marketing Ecosystem to work again

Some people might have thought that my Pinterest listing at the top of Google was a lucky demonstration of my Internet Marketing skills. I obviously didn’t make a Pinterest page with that title for no reason. However, when I was working on other Pinterest pages recently I noticed a few strange things happening and it got me to thinking that I needed a back-up plan for my ranking for this term so I determined to write a blog on the Centripetal Network Consulting website that would also rank   .

I am also writing this blog as a sort of Plan C !! 🙂

If you read this blog please take at least one thing away with you – to rank today you need a strategy that combines Social Media with a great website. Trust me – you do.

Getting a website or a blog to rank high for a specific term is an art form. Seeing that website or blog there is literally the tip of the iceberg. The part that you see of an iceberg is about 1 Tenth of the overall mass of that berg. Most of it is below the surface.

Most of the reason why my blogs rank so high is ” below the surface ” – you can’t see it even if you know how to analyse websites and blogs. Let me explain something to you. My blogs and websites are not even specifically targeted at Digital Marketing !!!! Obviously Centripetal Network Consulting is a global digital strategy, sales and marketing company. However, in a similar way to us ranking for ” Wealth Management London ” searches if I really wanted to  rank for Wealth Management terms I would build a blog or website focused on Wealth Management. Everything on it would be about Wealth Management. It would be THE authority on Wealth Management.

This site is about M & A ( Mergers and Acquisitions ) but the likelihood is that this blog is going to rank high.

Why ???? QUALITY !!!

From it’s foundations up the Centripetal Network Consulting website is a QUALITY website. It’s content is produced by humans ( mostly me ) and it is relevant to the topic in question if not focussed on it.

There’s something else that very few people talk about because they don’t understand it. If you think about it a web or blogsite is software running on a server ( like a PC or Laptop but built to ” serve ” software ).

Where is this server ?? Well it is usually in some sort of data centre somewhere in the world – could be the U.K. – might be  the U.S. , Europe or India.

Is it a shared server or a dedicated ( to you ) server. ( It is likely to be shared unless you have specifically sought a dedicated server ).

You might be wondering what the relevance of this is ?? You know how your PC and Laptop runs slowly when it has lots of software applications open on it ?? Well if you are sharing with other people with resource hungry web/blog sites your web/blog site is going to run slowly too.

That’s not all – your website can run slowly if it is not configured properly and has too many ” plug-ins ” .

The geographical location of your server and it’s connectivity also affects your website performance.

All of this affects the  ” performance ” of your web and blogsite and is one of Google’s ranking factors.

The positive effect of good website performance is the reason that companies like WP Engine  have started up. On their first page they have this testimonial for example :

“My site loads ridiculously fast, my page views are up, and my business
is seeing the results. I rest easy at night with the level of support.
My only regret: that I didn’t move to WP Engine sooner.”

– PHIL SIMON, AUTHOR OF THE AGE OF THE PLATFORM

We don’t host with WP Engine – we have our own hosting facilities, located in a place where there are high speed internet pipes in and out of the facility and our Chris Butler is always monitoring the performance of our site.

Hopefully you get my point – the foundations of our web/blogsite are rock solid and this is a primary factor in why I can rank so well for something like Digital Marketing Expert.

I started at ” this end ” of the factors because typically most people start at the other end. They have got a requirement for a website and whilst they think about the design of the website and what it needs to say they don’t think much about the ” infrastructure ” of that website.

You can sort of understand that but I didn’t get to the top of searches by worrying about design. WordPress is pretty much our default ” software ” for websites because we know that using WordPress we get great ranking results. We also know that there are a host of great plug-ins built for this environment and that there are thousands of people out there with WordPress knowledge if we need help. There are tens or hundreds of great ” themes ” to use.

Certainly we subscribe to the ” Keep It Short and Simple ” ( KISS ) approach. Over complex websites are going to load and serve slower. You don’t want loads of fancy graphics or plug-ins.

I always say that there are a few different types of people who get involved in website design ( it’s an over simplification ) – Graphic Design and Marketing people. Programmers and S.E.O. people. None of those people have a deep understanding of the true objective of a website which is to sell things.

I am not just a Digital Marketing Expert – I am also a Digital Sales Expert and a Digital Businessman – as are my partners at Centripetal.

It was only a chance discussion really.

I was out the front of my house doing a bit of a clear up when one of the neighbours walked by and asked how it was going.

We had a discussion about the economy and I was telling him about some of the conversation that I had had recently with James Martin, a partner at Begbies Traynor that I know.

http://www.begbies-traynorgroup.com/begbies-traynor/

Surprisingly, Begbies ( who are known for their insolvency work ) are not quite as busy as you might have thought – because for lots of reasons companies are not going  bust in the numbers that you would think was happening. Loads of reasons for this and I will try and get James to come on here and outline his thoughts on the subject soon.

Anyway – back to the point – so one of my neighbours tells me that he had failed to sell a company where he was a shareholder.

Or, more to the point their accountant had failed to sell the company ( but had managed to walk away with a substantial amount of fees ! ).

The one bidder ( !! ) had unsurprisingly ( to me ) managed to find loads of reasons why they should not complete the deal.

A ” dummy ” competitor had been contrived but the ruse failed because the M.D. of the one company called the M.D. of the other company and  said something like ” are you really looking to buy this company ” to which the answer was ( of course ) – No !!

So, that was the end of that little plan !!

In fact I have been working with a number of companies recently who finally realised that the only way that they were going to get a result was by creating serious competition for their business. Not pretend competition but real competition.

Selling a company ( like raising finance for a company ) is not an accountancy exercise it is a sales and marketing exercise. The chances of an accountant understanding this are close to zero.

The main problem is one of the main reasons that I started this blog – most business people do not know where to go to to get advice and guidance on how to sell a business. Because of this they end up going to their lawyer, accountant or ” one of their mates ” .

We nearly made the same mistake ourselves when we sold Voyager. In fairness our F.D. had raised his sights above our day to day accountant and was talking to Deloitte & Touche ( who we had earlier used for an acquisition ) and Deloittes have a lot of experience in selling businesses. However the key decision that we made at that time was to have a ” beauty parade “. I still remember the day that we wondered around Birmingham while Deloittes, Ernst & Young and someone else ( I can’t remember who ) presented to us on why they should be our representatives in the sale of our business.

In the end we chose Ernst & Young ( after much discussion ) for loads of reasons – we liked them, they had the best process, they would market us globally, they understood our market and the opportunity etc etc

The way to get a great result is to pick the right adviser in the first place – it is highly unlikely to be your lawyer ( although we did use the same lawyer for the sale as we did for the acquisition ) or accountant !!

After I wrote the main ” Selling a Business ” section of the M&A Rainmaker blog I came across the BCMS Corporate website here

http://www.bcmscorporate.com/

BCMS Corporate are a fabulous, family owned professional services  business focussed on the SMB sector and helping them acquire and dispose of businesses. They have a great downloadable book on thier website which I highly recommend.

They have considerable experience in the sector and I found that thier approach and sales process had many similarities with the one that I used and have advocated here.

There is no doubt that maximising the value of a business requires that you approach large numbers of companies, globally, many of whom would not have been in acquisition mode. If the potential acquirer( through skillful analysis and salesmanship ) is then convinced of the synergy and accretive nature of the acquisition they will be inclined to pay more than simple financial valuations indicate.

If, in addition, emotive considerations come into play, such as ” There will only be one chance to buy this company ” or ” I have to buy this company before my competitors do ” the the valuations will climb further.

So, I am entirely supportive of the BCMS Corporate approach ( and I might not have outlined all thier special processes here ) and the fact that it helps to maximise valuations.

What I try to get over to companies is the fact that you have to be thinking about maximising valuations well before you decide to sell. BCMS Corporate ( or any other M&A or Corporate Finance house ) basically do thier very best with the hand that they are dealt. They probably have about 6-9 months to ” clean-up ” the company.

This is not enough for real value creation and for addressing all the factors that can inhibit the value of your company such as lack of succession planning.

The conundrum is how to begin addressing these issues at least 3 years BEFORE you decide to exit. It is likely that if the business is an ” exit route business ” value creation ( and all that goes with it ) will be built into the strategic plan. Lifestyle businesses that decide to exit some time into thier business life are a different matter.

One of the reasons for creating this blog was to make business owners aware IN ADVANCE of the need to prepare a business for exit years before the event. Clearly this is a bit of a challenge because if you are not thinking of an exit you are not likely to be spending any time or money planning for it !!

Actually this is happening ! My colleagues and I are working with some businesses who are planning for an exit some years away. They have said to us ” What do we need to do to maximise the value of our company if we sell in about 3-5 years ” ??? Clever people eh ??

I am not going to describe all the things that can be done if you have that much notice but let us mention a few:

– One big one involves crystal ball gazing !!! There is general agreement that you want to sell before your business reaches the peak of it’s lifecycle so that there is life and growth in the business for your acquirer. To do this you need to understand your market and your business cycle.

– More crystal ball gazing is involved in attempting to predict what acquirers will be looking for 3-5 years hence and who those acquirers might be. This is just hard – it is not necessarily impossible !!

– You should try to be providing what the industry regards as ” sexy ” or ” fashionable ” products and services ( I keep my eye on Gartners predictions for the High Tech market )

– Ideally you need to show scalability and replicatability in your products and services

– Ideally you should have global possibilities for the sale of your products and services

– You should have clearly defined processes within your business eg dealing with support issues, forecasting sales

– You should ideally have Intellectual Property ( I.P. ) , something unique that you have invented

– You should have recurring business ( eg maintenance and support contracts )

– You should have a succession plan for all the main management ( I call this the ” If we all go down in a plane test ” )

There are many others but hopefully this gives a sample.

My colleagues and I spend our time helping companies with these and other ” business valuation drivers “.

When you combine these with the correct disposal approach you will almost certainly have a great result.

The original and still the most important purpose of the M&A Rainmaker blog was to impart the lessons that I learned in selling businesses, particularly High Tech businesses.

The process is discussed here

http://mandarainmaker.co.uk/wordpress/selling-your-business-2/

in some detail.

I use the sale of 2 of my businesses Voyager Networks and 5i as particular examples in the selling your business process. One of the reasons for this is that one, Voyager Networks, was sold at the height of the High Tech, Dot Com Boom in 1999/2000 and the other, 5i, was sold in the depth’s of the global economic recession in 2008/9. Yet they both sold and sold well.

A very similar process was used in both cases although there were differences other than the economic backdrop.

When we started Voyager we had no clear strategy for it being a lifestyle business or an exit route business. It only became an exit route business after my meeting with Investec and after innumerable approaches to buy us. This was something like 1996, 3 years into the life of the business.

5i, on the other hand, was started with the clear intention of exiting ( sale or float ) 3-5 years later.

In fact both businesses sold around 7 years after thier start and in conversations with other people who have sold High Tech businesses this seems to be a typical lifetime for a business before it is sold.

In both cases we conducted a ” Beauty Parade ” to find the right M&A ( Mergers and Acquisitions ) partner. In the first case settling on Ernst & Young and in the second Norton Corporate Finance. ( Actually it was probably thier Rainmakers and thier teams that we settled on aswell as the companies ).

I remember that in the case of Voyager we discussed who was going to sell the company ( after we had decided to sell ) and put into the pot Deloitte & Touche, Ernst & Young and one other ( who I forget ). To get to the short list the three partners each put out feelers amongst thier contacts and 3 were chosen for presentations. Our accountants and our lawyers were consulted ( D & T were our accountants ). We ended up using Ernst and Young and our lawyers ( from Leeds ).

With 5i the lawyers and accountants were consulted; board members and shareholders put forward suggestions and a process was followed which resulted in Nortons Corporate Finance being selected.

I have to say that in my opinion both firms were exactly the right ones for us. The Nortons process and culture was similar to the one at Ernst & Young and this was a factor in the decision to go for Nortons.

Now, there are a great number of Corporate Finance and M & A companies to choose from and it is very important to find the right partner with the right processes and capabilities.

It is possible that the right people to use are your own accountants and lawyers but probably not. Or, at the very least, you should look for alternatives. If you are very experienced at selling companies then you may well have lawyers and accountants that you have used on a number of occassions. My advice is directed at people who have not had these opportunities.

In an ideal world you want to have decided wether you are a lifestyle business or an exit route business as early as possible. Also in an ideal world, you want to give yourself time to select the right legal and accountancy M&A partners for you and your business.

It would perhaps take me too long to explain the whole story of how this book came about but it is a beautiful little book with some wise words in it written in a fun way. Perhaps one day I will tell the whole story !!

It’s author, Jet Rotmans, is an artist who, to me, has become an Internet artist. She may be one of the first artist’s to have embraced social networking and blogging and to have weaved art into the ether.

You can get a copy of the book here

http://www.floppyfaithfactory.com/

and you can find out more about Jet by Googling her and connecting with her.