10 Feb Consolidation is in full swing yet people are selling too late, Why?
Over the last 11 months, we have seen major increases in transaction volume but we are also seeing many sellers sitting out round after round of consolidation. This is somewhat normal but it is concerning at a time like this. We are not seeing typical lifecycle consolidation that warrants holding out for your target valuation. The consolidation we are seeing is based on renewed investor interest and increased market demand that is driving the requirement of scale in both service offering, technology, and corporate performance.
Waiting out for the right suitor can be a costly proposition and one that we recommend avoiding. This is not a cry to sell early but rather, put your hat in the ring and let the experts find the ideal structure to determine valuation even if that means putting an earnout tail on the deal. The opportunity to get paid for what has not yet transpired is very common these days as those consolidating are willing to get creative to bring the people and offering into their fold.
At Revenue Rocket we specialize in finding win/win deal structures for both buy-side and sell-side clients and have a lot of experience in documenting the right deal for both parties. We start with understanding your company and you in detail. Understanding where you are in your lifecycle from both a corporate and individual perspective is the key to structuring a deal that meets or exceeds your expectations. We always look at a potential transaction with a 1 + 1 = 3 mindset. Can both companies get somewhere together they can’t get alone?
We have seen dozens of deals come together in the past few months with companies that were not for sale or interested in a transaction. The reality is, sellers today are not always selling… the transactions act as more of a catalyst to achieving growth vs passing the buck. Being a part of a larger corporation has its benefits beyond cashing out. In our experience, 9 times out of 10 the buyers are looking for you as much as they are looking for your customers, products or service offering. Having post-close provisions in a Purchase Agreement can assure you and your team the autonomy or fuel you’ve been missing to grow your business.
One thing is for sure – if you do not entertain a transaction you certainly will miss out on the benefits that may come from one. So think about it this way… take the call and learn. You never know what the other side is looking for or what they are willing to do to have you be a part of the team.
Browse our open opportunities at https://www.revenuerocket.com/mergers-acquisitions/