There has long been a trend of astronomically expensive buyouts in the tech industry. The dream of many a bright up-and-coming tech entrepreneur is to come up with an attractive and original idea, secure some initial venture capital and then simply sit back and wait for a multi-million dollar exit. This dream is not as far-fetched as it may seem. In the past few years alone we have seen jaw dropping amounts of money exchanging hands in large tech buyouts, turning tech entrepreneurs into overnight millionaires. Facebook recently acquired Oculus for $2 billion as well as WhatsApp for a staggering $22 billion, and these game changing events are still fresh in the minds of hopeful entrepreneurs dreaming of a similar business path. In order to secure a lucrative buyout, they are searching for ways to primp and polish their businesses in order to make them appealing to potential investors. There are virtually endless piles of money for the taking in selling online businesses, and ship-shape organization is crucial.
Systems and Processes
Buyers have a lot invested in large acquisitions, and strive to have the minimum amount of risk. This means that they will be more comfortable in taking a business over if they know that there will be no major interruptions. Well laid out and adequately documented systems and processes go a long way in building buyer confidence, as this ensures the business will not grind to a halt if, for example, some of the staff leaves the company. When all of the processes are clearly mapped out, this means the business is ready to be taken over with a minimum of transactional costs. Buyers and investors will doubtless have their own ideas and ways to optimise and streamline certain aspects of the business, but taking over a well documented system saves a lot of hassle and provides much needed security. Processes can range from the simple to extremely complex, and they are proof to the investors that the business has learned from mistakes, is well thought out and that clearly planned steps have been taken to ensure its growth. Although some investors may be looking for businesses that have a lot of room for improvement and modification, this in no way means that efficient system implementation should be neglected.
The more information buyers have about a business, the more likely they are to get involved. Keeping a detailed and clean database of meeting minutes, important discussions and conference calls is good business practice and will not be lost on potential buyers. Recording meetings is the easiest way of doing this. These recordings can be forwarded to a third party for transcriptions. This is in most cases the most cost-effective approach, and ensures an easily searchable database of everyday business activities as well as an unbiased view of corporate culture and structures.
The vision of a company is its beating heart. While businesses are constantly changing and adapting to the ever-shifting business landscape, a company’s vision is a set of core values and purposes that remain fixed and unchanging. While some argue that the vision should be pragmatic and matter of fact, others believe an artistic and more esoteric approach is needed. The truth is somewhere in between the two. While artistic vision and a creative approach are essential in any pioneering field, a level headed business mindset is required to even get the company off the ground. An attractive and easy to understand vision shows investors that you have a realistic understanding of your field, a clear perception of what is possible and where you want your business to go. It also helps them to easily absorb and understand you businesses culture, and get a feel for its underlying flavour.
Above all, investors respect and value honesty and transparency. Being upfront with them builds mutual respect and trust. Although investors may opt not to buy your business, it pays to build strong relationships as they might follow up with you on some future projects based on your favourable interactions in the past. Focus on organization, as there have been many instances of companies being bought simply on the grounds of having a well trained, talented staff and a finely tuned business plan and processes.
About the Author
Mary Ann Keeling (@MaryAnnKeeling) is a freelance business consultant and social media manager from Brisbane, Australia. In her free time she enjoys playing guitar, doing all kinds of watersports and listening to music.