3 Things Working Against You When Selling a Business

Google recently acquired Aardvark, a social media company that lets users tap into the knowledge and experience of their extended network of contacts to get quick answers to specific questions.

Let’s say you’re from Melbourne, but in Sydney on business, and get a dose of back spasms. You can post a question to Aardvark that will ask your friends and friends of friends for a recommendation on a good chiropractor in Sydney.

Google paid US$50M for Aardvark.

Aardvark is a good case study on building a company to be sold. They didn’t try to compete with Facebook for all forms of social media.

Instead, Aardvark specialised in getting obscure questions answered by trusted contacts.

Google is in a Coke vs. Pepsi- battle with Facebook for dominance of the social media category, so it made sense to look at Aardvark as an acquisition.

Could Google have built the same technology? Absolutely !!.

Could Google have acquired Aardvark for less money and time than it would have taken Google to build it from the ground up? Yes again.

Aardvark therefore gets acquired.

We all know that becoming the world’s best at something can help you win business; becoming famous for one thing can also help you sell your company.

Strategic buyers are looking to pick up something new they don’t have and couldn’t easily create on their own. Before doing a lot of due diligence, strategic buyers ask 3 basic questions:

  • How much would it cost us to build from scratch?
  • How long would it take?
  • How much could we buy that company for?

If you offer a broad set of products/services that a potential buyer also offers some/all of, that potential buyer will argue that it would be easier to just build what you’ve created and drop its price below yours or hire a couple of salespeople to go after your customers.

However, if you offer something truly special that is difficult to replicate, the acquirer will want to buy your business instead of wasting the time and money to build it from the ground up.

Becoming a specialist in one thing will not only help you in your marketing; it will also help you get acquired for a premium when you’re ready to exit.

To find out more about where you currently stand as a business you can check out the “Sellability Index Quiz” by going to http://builttosell.com/siq.php and answering the 10 questions to get a view on where your business is at.

Either way, if you’re thinking of selling, you should contact me to help you understand your options (plus I may even know who your “buyer” will be, based on my current clients).

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