Do Buyers really know what Sellers want when being acquired?

March 4th, 2013

Reasons to Sell

There are many good reasons for selling a staffing firm. Some sellers are thinking about retirement or at least liquefying what is often their largest asset so they can take some chips off the table. Others may feel they have grown the business as much as they can on their own and to reach the next level for their business they will need a well-suited, deep-pocketed partner.

 Some owners as they age become more risk averse and are reluctant to continue to invest their retirement funds to grow their business. Additionally, there are some owners that would prefer to tap into an acquirers’ existing infrastructure and distribution network then try to create their own.

 Other drivers are the lack of available, reasonably priced growth capital, the lack of reasonably priced insurance protection, access to certain volume purchasers of staffing services through VMS or other purchasing methods that can dictate lower margins and less direct customer contact on a staffing supplier.

 These are the general reasons that motivate Sellers. What are the specific reasons that may encourage a Seller to choose your firm?

 Why sell to you?

Certainly a high purchase price, with 50%-70% cash on closing and a good upside potential for growth will be huge plus factors for a seller to consider. 

Sellers prefer notes for the balance especially if they are not active or not remaining with the business. Buyers generally prefer earn outs if the owners are staying on, to share the risk going forward. Since many current transactions contain earn outs, why would a buyer want to create an environment that impairs the seller’s ability to improve profits?

 A wise Seller will look most seriously at the Buyer who offers their business the best opportunity to continue to succeed as they have thus far.

It may be surprising that a wise Seller will often choose his acquirer by his/her determination of which acquirer will create the least amount of internal and external changes. Changes mean uncertainty and sometimes disruption that can add to the risk of success for both buyer and seller. Change also increases the need for communication so staff members can be sold on the benefits of the change.

In fact, an acquirer would do well to avoid any change that is not absolutely necessarily by law and slowly introduce other “branding” type changes on a scale that the acquired staff can handle without a loss of staff or business.

It is always interesting to see Buyers rave about the staff and culture of an acquisition target firm only to destroy its very value and essence within a short time period post acquisition by introducing unnecessary changes so the acquired firm will look like all the other branches in the acquirer’s system. This is often precisely the fear the acquired staff had about being acquired in the first place.

When acquired staff is unhappy they tend to polish up their resumes and dig out the card of their favorite industry recruiter and see what is available. Of course, the most talented are often the most mobile. Consequently, the acquirer may lose some key performers through their actions and then blame the process or the acquired, often anyone but themselves.

For a complimentary discussion on any M & A Topic, contact us.

Bob Cohen and Sam Sacco run R.A.Cohen Consulting, a trusted industry M&A advisory service.  The partners have advised on over 140 successful industry transactions. 

 They can be reached at (416) 229-6462, (910) 509-0691, respectively, or bob@racohenconsulting.com and sam@racohenconsulting.com.

 For more information: www.racohenconsulting.com

 

Do Buyers really know what Sellers want when being acquired?

March 3rd, 2013

Reasons to Sell

There are many good reasons for selling a staffing firm. Some sellers are thinking about retirement or at least liquefying what is often their largest asset so they can take some chips off the table. Others may feel they have grown the business as much as they can on their own and to reach the next level for their business they will need a well-suited, deep-pocketed partner.

 Some owners as they age become more risk averse and are reluctant to continue to invest their retirement funds to grow their business. Additionally, there are some owners that would prefer to tap into an acquirers’ existing infrastructure and distribution network then try to create their own.

 Other drivers are the lack of available, reasonably priced growth capital, the lack of reasonably priced insurance protection, access to certain volume purchasers of staffing services through VMS or other purchasing methods that can dictate lower margins and less direct customer contact on a staffing supplier.

 These are the general reasons that motivate Sellers. What are the specific reasons that may encourage a Seller to choose your firm?

 Why sell to you?

Certainly a high purchase price, with 50%-70% cash on closing and a good upside potential for growth will be huge plus factors for a seller to consider. 

Sellers prefer notes for the balance especially if they are not active or not remaining with the business. Buyers generally prefer earn outs if the owners are staying on, to share the risk going forward. Since many current transactions contain earn outs, why would a buyer want to create an environment that impairs the seller’s ability to improve profits?

 A wise Seller will look most seriously at the Buyer who offers their business the best opportunity to continue to succeed as they have thus far.

It may be surprising that a wise Seller will often choose his acquirer by his/her determination of which acquirer will create the least amount of internal and external changes. Changes mean uncertainty and sometimes disruption that can add to the risk of success for both buyer and seller. Change also increases the need for communication so staff members can be sold on the benefits of the change.

In fact, an acquirer would do well to avoid any change that is not absolutely necessarily by law and slowly introduce other “branding” type changes on a scale that the acquired staff can handle without a loss of staff or business.

It is always interesting to see Buyers rave about the staff and culture of an acquisition target firm only to destroy its very value and essence within a short time period post acquisition by introducing unnecessary changes so the acquired firm will look like all the other branches in the acquirer’s system. This is often precisely the fear the acquired staff had about being acquired in the first place.

When acquired staff is unhappy they tend to polish up their resumes and dig out the card of their favorite industry recruiter and see what is available. Of course, the most talented are often the most mobile. Consequently, the acquirer may lose some key performers through their actions and then blame the process or the acquired, often anyone but themselves.

For a complimentary discussion on any M & A Topic, contact us.

Bob Cohen and Sam Sacco run R.A.Cohen Consulting, a trusted industry M&A advisory service.  The partners have advised on over 140 successful industry transactions. 

 They can be reached at (416) 229-6462, (910) 509-0691, respectively, or bob@racohenconsulting.com and sam@racohenconsulting.com.

 For more information: www.racohenconsulting.com

 

4 Lessons from a Time Square Street Peddler

November 26th, 2012

A street hawker may seem like an unlikely teacher, but you can use their simple techniques to increase the power of your sales efforts. They follow the basic rules of selling.

With a few small editorial changes, the credit for this post belongs to the author Matthew Swyers*, who shares in his own words.

 I was recently in New York City for business and stayed in Times Square. If you spend any amount of time there, in addition to other landmarks such as the famous ball that descends on New Year’s Eve and, of course, the Broadway marquees, you will also notice aggressive salesmen roaming the streets selling their goods and services.

They go after almost everyone, especially tourists who easily identify themselves by constantly starring skyward at the tall buildings in the city.

Some may dismiss these modern-day barkers as annoying parasites, but I always stop, from a safe distance, and marvel at the skills these street salesmen have perfected.  Although often crude and in your face you can learn a lot from these salesmen who hock everything from umbrellas to theater tickets. So what can you take away from an afternoon watching these guys?  Here’s what:

1. Engage

The No. 1 rule of thumb is to engage your prospective customer. In Times Square these street merchants will approach anyone, anytime, on any corner. That is how they engage their potential customers. For you it may be picking up your phone to speak with an inbound lead or perhaps it is methodically going through a cold-calling list. Whatever the case you cannot sell if you do not first engage. You must be unashamed and outright about it. That is what you are there to do. Do it.

2. Get Them Talking

Perhaps the most underrated skill among salespersons is the ability to get your prospective customer talking. In Times Square, for instance, if you happen to be wearing a Chicago Cubs Jersey they’ll say stuff like “Go Chicago” or “How them Cubs doing this year?” All they need is eye contact or any form of response and they have you. “Are you from Chicago?”  “Well, welcome to the Big Apple.”  “So what have you seen thus far?”

They’ve engaged you and they are getting you talking. In any sales position you must get your prospective customer talking so you can learn what they like, don’t like, and need so you can fashion your pitch and your products to fit what they need.

3. Listen and Use It

The guys in Times Square are fantastic at listening to what people have to say and using it to get to the next point and the next point until they can get to their pitch. Let’s say you offer that you’ve seen the Brooklyn Bridge and Times Square but that you just got into town. Bingo! You said the magic words.

 4. Pitch and Close

Once they identify the information that they need, those Times Square salesmen are masterful pitch men and closers. “You haven’t seen the Statue of Liberty?” “Wow, have I got a deal for you.” And here comes the pitch…all that from wearing a Chicago Cubs Jersey.

*Matthew Swyers is the founder of The Trademark Company, a Web-based law firm specializing in protecting the trademark rights of small to medium-size businesses. The company is ranked No. 138 on the 2011 Inc. 500. @TrademarkCo

Our goal is to help you become better informed; for more information on Staffing M & A or a complimentary confidential discussion, contact:

 Bob Cohen at 416-229-6462 or Sam Sacco at 910-509-0691.

We can also be reached at bob@racohenconsulting.com or sam@racohenconsulting.com.

Sam and Bob have successfully completed over 135 staffing industry transactions. Visit our website for more articles and information at:   www.racohenconsulting.com

5 Terrific Things Your Business Should Be Blogging About

November 19th, 2012

I believe that we are all living out a story. You play the hero. You have villains, allies and mentors. You face and overcome tragedy. You triumph and sometimes fall short. The poets among us have called this the “human condition”

I feel that marketing is about connecting the vision of a business with each person’s story and businesses succeed when they have won a role in that story.

I love blogging because it is the purest way for a business to audition for a role in their customer’s story. Taking the metaphor a bit further I figure that the business blog needs to “nail” 5 lines to win the part of “friend.”

Here they are:

#1 Being Vulnerable: Vulnerable businesses are captivating. It’s nice to see Apple screw up every once in a while. It’s compelling when a consultant says “I was wrong. Let’s try another way.” Every once in a while, share your businesses bloopers reel.

#2 Being Sentimental: Every business has a sappy side that celebrates little things that mean a great deal. I once worked for an agency that burned to the ground. It’s employees watched it burn from the parking lot.

The next day, employees met in houses and coffee shops determined to not miss a single deadline. The day the newly rebuilt agency opened its doors, the employees received a sweatshirt with a match on the front. I still have that sweatshirt 14 years later.

Being sentimental isn’t weak. Its special and you should blog about it.

#3 Being Heroic: Sometimes it’s difficult to dream big. Our institutions have done a great job of training heroism out of us. Every once in a while a business does something heroic. Most likely someone in the business decides to dream big and pull the rest of their colleagues along. These times are special.

When was your businesses heroic moment? Tell your customers about it.

#4 Being Selfless: When was the last time your business did something truly selfless? Google pays the spouses of employees who’ve died up to half their salary for ten years and their children get $1,000 a month until they are 19. Amazing, now I want to hear more about Google.

Your small business or large business probably does amazing selfless acts like this too. Your readers should hear about them. It makes them proud to do business with you.

#5 Being Foolish: Some things don’t make any sense.

I’m not sure why Google wants to build driverless cars. I wish I understood why Jeff Bezoes is committed to mining asteroids. Why in the heck does Richard Branson own Virgin Galactic? None of these things make sense. They seem foolish. But they do remind me that real people with crazy dreams run these businesses and I want to hear more. How about you?

There isn’t a Formula for You to Copy-Sorry.

You know I’m incredibly practical about blogging. I’m sure you were looking for a nice template to follow.

The only nugget of wisdom I can give you is this…

Pay attention to the drama playing out in your readers’ lives. Look for the drama playing out in your own business. Find ways to connect the two.  This post was written by Stanford.

About Stanford: I’m Stanford and I want to help you stoke your passion, spread your message, and help your blog get noticed and promoted. Take a look in the archives.

Our goal is to help you become better informed; for more information on Staffing M & A or a complimentary confidential discussion, contact:

Bob Cohen at 416-229-6462 or Sam Sacco at 910-509-0691.

We can also be reached at bob@racohenconsulting.com or sam@racohenconsulting.com 

Sam and Bob have successfully completed over 135 staffing industry transactions. Visit our website for more articles and information at www.racohenconsulting.com

14 Ways to Overcome Phone Rejections

October 15th, 2012

Rejection can transform failure into a powerful tool for success and help your team develop the skills needed to deal effectively with adverse situations. This can be an effective reminder for us “old pros” as well.

Here are some more critical points to help overcome rejection.

  1. Use rejection as a form of feedback for self-improvement what when wrong? What could’ve been done to prevent it?
  2. Break challenges into incremental steps so that any failure is minimized.
  3. Channel anxiety into a creative force for achievement so that, when frustrated, we become more productive.
  4. Most salespeople will succeed only to the extent they are willing to suffer though many disappointments.
  5. Being ready for the unexpected increases our chances of succeeding.
  6. Whether we experience failure or success is unimportant; what is important is the way we deal with the experience.
  7. If we can’t accept failure, we will quickly lose our enthusiasm.
  8. Believing we have a chance to succeed sharpens our mental vision.
  9. We resolve our fears by taking risks.
  10. By breaking out of our comfort zone, we expand the arena of our opportunities.
  11. When we avoid failure, we’re also avoiding new challenges and opportunities.
  12. Recognize that failure is the ultimate teaching tool. Every disappointment teaches a positive lesson — we just have to learn from it.
  13. 13. It’s in times of adversity that we usually grow the most.
  14. 14. Every rejection brings you closer to success.

Adapted from the book The Courage to Fail by Art Mortell.

For more information on Staffing M & A or a complimentary confidential discussion, contact:

Bob Cohen at 416-229-6462 or Sam Sacco at 910-509-0691.

We can also be reached at bob@racohenconsulting.com or sam@racohenconsulting.com. Sam and Bob have successfully completed over 135 staffing industry transactions.

Visit our website for more articles and information at: www.racohenconsulting.com

 

5 Growth Strategies for your Business

September 10th, 2012

Here are a few tried and true strategies to help your business grow.

Each will require an action plan to implement in order to achieve your goals, however, it doesn’t have to be elaborate, it just has to be measured at regular time periods to see if you are on target and if not, to help the person (s) that are responsible for taking those steps that are holding the plan back.

1.  Expand what you are presently offering in your present location.

2.  Introduce new lines or sectors of business in your present location. It could be a speciality or niche you can develop and be known for in your industry.

3.  Expand geographically-take what you are doing to new, nearby locations, preferably send a trusted and valued employee from your present operation to get it started properly, in your style and culture.

4.  Acquire smaller culturally adaptable firms to expand at your present location or to open new territories for your business.

5.  Merge or sell to a larger firm who has already made the investment to expand their infrastructure as long as they do business in a way you and your staff will be comfortable with implementing.

Clearly, there are a lot of ways to grow your business; here are just a few suggestions. Enjoy the growth!

For more information on Staffing M & A or a complimentary confidential discussion, contact:

Bob Cohen at 416-229-6462  or  Sam Sacco at 910-509-0691.

 We can also be reached at bob@racohenconsulting.com or sam@racohenconsulting.com.

Sam and Bob have successfully completed over 135 staffing industry transactions.

Visit our website and check out the Resources Tab  for more Blog posts, articles  and archived Newsletters:   www.racohenconsulting.com