June 21, 2018
What you can learn from the World Cup in preparing your business for sale
Since the club football season ended earlier this summer, this year’s World Cup has dominated the back pages. The last few weeks of training in the build-up have been important for teams to gel and focus. In reality, preparation truly began well before this, and most of it, behind closed doors. In fact, teams will have started from the point in which the curtain closed on the last World Cup in 2014.
When it comes to preparing your business for sale, it is never too early to start. In international football, national football federations will invest in youth and infrastructure to increase their chances of a successful future campaign. Similarly, adequate and effective investment (be it time or financial) in pre-sale planning will improve your chances of a successful exit.
At Bluebox, we work with businesses in advance of a sale exercise to help to ensure they are positioned in the best way possible. With the World Cup on everyone’s mind, here are some key lessons we can draw from it in preparing your business for sale.
Prepare early
The World Cup comes around every 4 years. For footballers lucky enough to feature, it represents one of, if not the, most significant event in their careers. Every player will have dreamed about lifting the trophy since a young age and, for some, the opportunity to do so may only come around once.
The significance of the occasion can be compared to that of a sale exercise, which is a key milestone for business owners. In many cases, it is the ultimate end goal they would have set at the outset of establishment. Therefore, getting things right is key. And, for some, like footballers, the opportunity may not present itself again.
Pre-sale planning can heavily influence the outcome of an exercise and thus, it should never be underestimated. Like football teams who will diet strictly, and even train in high altitude to acclimatize to weather conditions, businesses should consider every way in which they can ensure pre-sale planning is strategic and watertight.
Ensure there is a strong and stable management team
Two days before this year’s tournament kicked off, Julen Lopetegui, the man in charge of Spain’s World Cup campaign, was sacked by the Spanish Football Federation. Prior to this, Spain had been considered strong favourites; they have been very successful on the international stage for a number of years, and boast a reserve squad that would challenge most other international teams. Despite the likes of Sergio Ramos and Diego Costa in the first team, the Lopetegui fiasco has caused many to question their ability to go all the way.
When acquiring a business, most investors will want to see a strong and stable management team in place, or get comfortable that the business is equipped to run as effectively if the existing owners are looking to exit. Without this, as seen with the Spanish national team, confidence is likely to falter.
Don’t put all your eggs in one basket
During this season’s Champions League final, Mo Salah, Liverpool’s Egyptian star player, was forced off with an injury, which put his World Cup contention in doubt. Egypt are by no means expected to be seen on the podium in Russia with Salah in the team, but without their talisman, the odds are stacked against them even more.
Similarly, over-reliance on any one strength, for example, a customer or supplier, can be a red flag to any potential investor. It can indicate a significant risk as if this relationship were to collapse, their investment would take a hit. Diversifying such relationships will help to spread risk in your business, and provide investors with a safety net in which they are more comfortable to work with. If you look at the likes of Germany and France for instance, the loss of a key player would be more of a hiccup to them than a catastrophe.
Manage expectations
World Cup fever has swept the nation. Many England fans seem convinced, yet again, that football is coming home. As one myself, I am all too familiar with getting carried away in the belief that we will see a repeat of 1966. This, however, has only ever led to bitter disappointment and nothing encapsulates this more than failing to reach the knockout stages at the last World Cup. Of course, anything can happen in football (Leicester’s Premier League success is just one example), but overwhelming optimism leaves us vulnerable to disillusionment.
Selling a business can carry the same emotional involvement. For most business owners, their business is an extension of themselves. They have a strong personal attachment and this means it is easy to see things through rose-tinted lenses. Setting expectations too high increases the chance of dissatisfaction later on. Realistic expectations, however, allows a wider scope of options to be explored. In turn, investors can better understand the potential synergies with your business and uncover the true value they place upon it.
If England were to reach the semi-finals, I am sure all rational thought and expectation would go out of the window. Until then, however, I would rather choose to expect less and enjoy more!
Please get in touch if you’d like to discuss Bluebox or our pre-sales planning programme, Blue Diamond.