Mergers & Acquisitions Marketing Strategy

Maximizing your exit; hitting your targets in divestiture or acquisition

Whether you are planning to exit your company or accelerate growth through acquisitions in the next few years, your marketing foundation and strategy will significantly impact valuation and success after a major sale. This 3-part series will walk you through the key stages:

1. Marketing Strategy in Exit Planning: Creating a marketing strategy to maximize your valuation
2. M&A Marketing Strategy: Brand transition and roll-out communications strategy to retain customers and employees, and open new doors
3. Achieving ROI on Acquisitions: Increasing market share, share of wallet, and achieving new efficiencies to hit your targets

Launch Team has worked with B2B technology companies, from start-up to Fortune 100, for nearly 40 years. This guide will provide general guidance suited for companies at each stage. Specific benchmark data is suited to B2B technology companies serving niche but global markets.

Part 1: Preparing for Exit

Well before marketing your company for sale, there are strategies to improve your multiplier. Most deals will look at revenue and profits for three years, and your growth trend during this time. Lay the groundwork for strong numbers and understand the drivers of valuation and goodwill.

Buyers will be looking for:

• 3-year revenue and profit growth trends: Buyers in some segments consider YOY 20% growth to be a sweet spot.
• Growth potential: strategic buyers will look for top-tier customers for growth and cross-selling opportunities. How would your top-tier customers benefit strategic buyers? Do they provide opportunities for growth or cross-selling?
• Risk: revenue diversity of customers and markets. How much do your top 10 customers represent of your total revenue?
• Data integrity: Do you have reliable data for revenue, marketing and sales metrics — not a gut feel of your metrics? Do you have robust CRM utilization?
• Repeatability: Are your sales and marketing processes defined and documented?
• Competitive advantage: What sets your company apart in high-growth markets?
• Strategic Fit: Do your technologies fill a gap in the acquirer’s product strategy?

Above all, rigorous, data-driven sales and marketing can help you prove demand in the market, and the value of your company’s brand and strategic positioning.

As you build a marketing strategy for exit planning, focus on positioning your company and products as a valuable acquisition target, establishing market leadership, clear competitive advantage, and growth potential.

Assessing your marketing strategy well in advance of an exit ensures you can exit when the company is doing well, not when you need to, at a premium. This will also allow you to drive the needed leads for a strong three-year growth trend.

Strengthening Your Brand Story

For smaller companies, preparing for an exit may mean shifting brand recognition from you, the leader, to the company. Through our experience of helping CEOs separate from their companies, we have found the best way to prioritize your brand is to make a short list of promising acquirers and consider the drivers for each.

If it’s a strength to be in a particular high-growth market, consider shifting your marketing strategy to prioritize growth and brand awareness. If there is a specific product line or technology you want to tap into, you may want to invest in product naming and branding to help it stand on its own. You may also want to make process changes to ensure you have product-specific sales data to demonstrate future opportunities.

A strong brand reputation drives up goodwill and positions for your company to attract strategic buyers. Start by establishing:

• Consistent messaging about your company’s achievements and competitive advantage in credible trade publications and your communications like social media, whitepapers, blog articles, etc.
• Visibility and credibility of thought leaders beyond your key executives
• An optimized pitch deck or capabilities presentation with investors or acquirers in mind
• A process to highlight your intellectual property, strong customer base, and market share

Building the Pipeline

To start building an optimized sales pipeline, you will need to understand which size companies demand the highest multiplier in your industry. Based on that, you can set a profit and revenue target, allowing you to make a plan to reach it. Working backward, you’ll be able to set specific growth targets and key sales and marketing metrics such as average deal size, quotes per month, leads and web traffic. Consider that this year’s marketing determines next year’s sales, which may make your timeline for action more concrete.

In today’s environment, sales and marketing data may face nearly the same scrutiny as financial due diligence. Clean data and established processes will help to make the business case for a successful transaction. Strive for consistent CRM adoption, with your CRM the source of truth for customer relationships, contact database, opportunities and contracts.

Data-Driven Marketing Strategy

Make sure you have the metrics in place to demonstrate marketing growth and an accurate forecast. Traffic and lead trend lines should be in line with your growth projections. Consider targeted marketing strategies like account-based marketing (ABM) to go after key accounts in high-growth markets, or of particular interest to an acquirer.

For example, if you believe a European competitor would like to enter the US medical device market, target the top 10 US medical device companies. Your brand presence may be demonstrated by contacts, inbound leads, and followers within this segment. Consider tightening your market positioning to create a unique value proposition for this target.

Exit Planning Case Study

Scenario:

Your company, NewCo, has now been in business for six years. Its growth, both domestic and international, has been explosive. You decide it is time to sell while the company is strong. You entertain offers from both domestic and foreign buyers, eventually settling on a sale to a subsidiary of your UK contractor. Negotiations and diligence activities are at a fever pitch, with teams of business pros and lawyers exploring every aspect of NewCo’s business.

• Company growth was strong and showed promise
• The decision to sell was made while the company was doing well
• There are more stakeholders than ever—prospective buyers, employees, customers
• Change to offering, value proposition
• Brand implications

Consider:

• Foreign and domestic buyers
• Full or partial exit
• Data-driven strategy and digital platform to quantify sales pipeline
• Strong communication plan
• Pipeline—more than one go-forward strategy

It’s critical at this point that you’re not married to the deal. Too many companies accept a bad deal because they weren’t prepared with other options. Look at business sale opportunities as a pipeline as well. If you’ve been building your brand and sale pipe­line, you’ve raised your valuation and proven to the buyer that the business, without you, is a stand-alone asset.

Sales & Marketing

If you’re being acquired by a customer, look carefully at what you will sell. Are you an internal provider, or will you maintain your customer base? Which customers are at risk? Craft a strong communication plan early. Remember to include all your au­diences: customers, investors, and your own employees. The ability to retain key experts after the close adds to your value and the likelihood of your success.

Looking for specific guidance on marketing and sales priorities in exit planning? Book a confidential consult.

Subscribe for the full series on marketing strategy in M&A.