It’s common knowledge that strong marketing drives demand, brings new customers and increases sales, but what’s less talked about is how a well-thought-out Valuation Marketing™ program can increase the value of the company itself and put it in a great position to sell.
Recently, I had the opportunity to speak with Adams Price, Managing Director of Plante & Moran Corporate Finance (PMCF), for some expert insight about how marketing impacts Mergers and Acquisitions (M&A). As it turns out, marketing is critically important. Let’s explore the basics and understand why marketing increases buyer interest and valuation for a company’s sale.
A Business Purchase Starts With First Impressions
The first thing prospective buyers do when researching a company to potentially acquire is to take a look at the website. The level of sophistication of the company’s site will give them an idea of the level of sophistication of the company. If the website looks homegrown, the potential buyer will get the sense that the company is small and homegrown (whether that’s actually true, or not). On the other hand, if the website is professionally written and designed, the buyer’s interest will be piqued, and their first impression will be one of higher value.
So what gives that great first impression? At first glance, it’s the company’s Visual Identity. Is the company logo unique and well designed? Is the website attractive and easy to navigate? The next key impression is the Voice Identity. Do the headlines convey strong messaging? Is the positioning of the company clear? Can I get a sense of how this company is different? And how it stacks up to the competition? Are there trademarks? If all these answers are yes, the perception of value goes up again. If not, it’s a valuation ding.
Buyers Want to Know What People Are Saying
Next, prospective buyers Google the company and check out the search results. What’s the news about the company? Is there any? If so, is it good or bad? If it’s bad, obviously there’s a problem. If it’s good, put one more check in the positive column. The more positive noise, the more exciting the company is as a prospect. Lots of positive mentions and links means there’s lots of interest. For a prospective buyer, it’s another good sign.
After checking out the search results, the prospective buyer will look at social sites. What does the page look like? Does it look professional? Are there lots of followers and engagement with the brand? If the company sells B-to-B, the company’s LinkedIn page is a first stop, followed by Facebook and Twitter. If the company is B-to-C, add Instagram, YouTube, Pinterest and more. It’s largely defined by the target audience, but a strong social presence is a must.
Using Marketing to Increase Valuation Takes Time
An important — and often overlooked — point is that generating interest doesn’t happen overnight. According to Adams, the marketing process to prepare for a sale ideally should begin two to three years before the company is planning to be listed. He explained that the mechanics of selling a company are a lot like staging a house. It’s generally known that an empty house doesn’t sell as fast — or for as much — as a house staged with attractive furniture. Curb appeal, paint, landscaping and how the interior looks are all important to prospective buyers. Good staging gives people a better sense of how the space can be used. Lucrative real estate sales take some up front planning to ensure a faster sale and to get the highest price.
The tenants of prepping a company for sale are similar. And there’s a lot of work to do. Here are some of the basics:
Refine the company positioning and value proposition
Polish the logo and Visual Identity
Update the website
Clean up your company social pages and create interesting, value-added content for blogs and social media
Share that content with external sites that link back to your company
Increase visibility on page one placement on search engines for key terms
And depending on your target audience, investigate all other opportunities to create a lot of great buzz!
Long Term Planning Yields Big Returns
Yes, setting your company up with a Valuation Marketing program takes time and investment, but it’s worth it. The more you invest in marketing to “stage” your company, the more interest your company will generate, and the more buyers will engage in the process. And with more buyers engaging in the conversation, there’s more competition. Just like selling a house, if there’s more competition and multiple bids, the value and price go up. So plan ahead with marketing — when selling a company, higher valuation is the name of the game.