“But it’s just not what we want”. The chairman of the board of the listed company was quite adamant. I looked at the shareholder, CEO and negotiator for the seller, who was gloomily flattened. The last few weeks had been harrowing for him.
He had insisted that the only purchaser for the business was this particular listed company. He had insisted that he knew where this – the ultimate customer – should be steering itself.
He had personally put together all the sales material. He had guided the data flow himself. It was an experience he was determined to live, anything but vicariously.
The deal failed shortly before Christmas of that year. The holiday season gave the CEO time to think. In the new year he vowed to do things differently; and he did. Two years later we helped ease the business into the control of an unlisted competitor on favourable terms to both buyer and seller, in an eventful tussle between competing bidders. Various interested parties were all unaware of who their rivals were, and were all protected from one another by a carefully managed, progressive due diligence process.
Some of the time from failure to success had been spent spent putting together a selling plan tailored to what investors in businesses, or people looking to buy businesses (the ultimate customers) actually want; as opposed to what the seller of the business thought they should want. Their dream, not his. The result was what he in fact had wanted all along – an exit on favourable terms, allowing him to move on to bigger and greater things.
The late Steve Jobs famously said “A lot of times, people don’t know what they want until you show it to them”. This uncharacteristically arrogant claim (some will disagree with part of the adjective clause), was some ten years before the iPhone 3G bombed in the Japanese market. When released, it would sell only 200,000 units in that tech savvy market.
With a second bite of the apple several years later, the iPhone 5s captured 34% of the same market once Apple had accurately determined what the Japanese market actually desired, and then delivering it in the form of the new phone.
So too, for business offerings down our end of the dark continent. Businesses which are worth selling, and which have in fact made it far enough to be valuable sellers, achieved the status by supplying what their individual customers actually want. So why should the eventual selling of the whole business be any different? The ultimate customer of the business is not going to just buy anything. He wants something which fits into his plans.
- For a smallish operation, it may be something which simply provides an income.
- For many different size operations, it may be something which can be rationalised to use up excess capacity of the buying company, to create greater value.
- It may also be the means to a greater market, a particular product, some new technology, or a specialist operator.
- For large operations it may be the vanity target of directors with a large war chest.
For all buyers, there is something which pushes their buttons – something which they need or want. But that imperative comes from them, and while business owners may be able to manipulate the greater market of their micro products over a period of time by way of marketing, talking and networking, when it comes time to sell something as significant as a business, it is unlikely that they will be able to influence the business buying market to such an extent as to have it see things their way, which also happens to be a contrarian way.
Bottom line: it is necessary to present things the way the ultimate customer wants them presented.