Selling a company to a Multinational

Junemoon

Anyone ever sell a company to a Multinational ? How do you attract them to your business ?

delahuntv

If they want you, they will find you.

Otherwise you can use a firm of accountants who can suss out interest.

I was nearly in that position - then another competitor went bust and the company bought their sites. It was like having the right lotto numbers but for the wrong date!

pedronomix

One very effective way to put your business in play is to do the rounds of the VC players seeking to raise some cash. The VC guys have great MNC contacts!!

Junemoon

Junemoon wrote: »

Anyone ever sell a company to a Multinational ? How do you attract them to your business ?

I sold my first proper business to a multinational. I was 22 at the time I think and thought I had my **** together in terms of administration. How wrong I was, suffered a lot of embarrassment in the due diligence. So before approaching, putting up for sale or whatever, make sure every tiny detail of your administration is perfect, otherwise they'll find it!

How to attract them to your business? This can't really be answered unless more is known about your industry and specific business.

Duckett

Prepare a draft outline sale prospectus and consult tax and business advisory firms active in the M&A space. Have a general wish list of the active buyers in your sector. Be clear in your own mind about the value of your team and IP, why you want to exit now, the workout period you expect and a realisticc basis for your expectation on price ..... audited financials, past customer base, international experience, 3 yr projections including future recuring revenues and details on any pending legal issues .... who will run the business and how will it perform when you are gone!!

pedroeibar1

Junemoon wrote: »

Anyone ever sell a company to a Multinational ? How do you attract them to your business ?

Looking at this a different way …….. I used to be on the acquisition side of a MN business and every business we acquired was well-known to us from an existing relationship as a supplier.

Firstly, MNs do not go out on an ‘acquisition trail’, despite those words being bandied about in the media and PR. What MNs do is have a very specific strategy to meet very specific needs. They know the targets and they have a shopping list. Price is a consideration, but it never is top of the list.

Secondly is size - MNs are money rich and time poor. As a result, an acquisition rarely involved dealing with new or fledgling companies because it takes too long to integrate and ramp up a small business so it is far easier to use more cash to get something bigger which, with the same effort, will reach critical mass much sooner.

Thirdly, excluding receivers/Chapter 11 trustees, over a period of two decades I was approached with a worthwhile proposition on only one occasion by a potential ‘acquiree’. He was a guy I knew quite well from the industry (pints at seminars!) who needed our technology input to bring his company to the next level and we took a substantial stake with first right of refusal on the remaining equity.

What I’m saying really is you need to get noticed by the multinationals with whom you are already dealing. You need to make your service/product invaluable to them, best in terms of price, quality, delivery - that is the easiest way to get on the shopping list.

pedroeibar1

pedroeibar1 wrote: »

What I’m saying really is you need to get noticed by the multinationals with whom you are already dealing. You need to make your service/product invaluable to them, best in terms of price, quality, delivery - that is the easiest way to get on the shopping list.

If you have some intellectual property as an asset in your company, it changes things quite a lot. Then it can be a matter of finding and pitching the right people with the right kind of proposal

pedronomix

MNCs only buy small operations if they possess the the 4S's. Serious, Scaleable, Sexy and Secure IP or own an interesting market. I would concur with the last two posters, Stay away from trite textbook type advice. Your potential punters need to lust after your goodies, the rest is BS detail. If you can get into heavy petting, get serious advisors on-board.

pedroeibar1

Deleted User wrote: »

If you have some intellectual property as an asset in your company, it changes things quite a lot.

Agreed, good point, I should have made that clear. It’s down to where the MN buyer is coming from. We were the market leaders in our field by a large margin, years ahead of the curve, so I tend to overlook that. I was on the ‘business’ side rather than technical, so always had good input from support staff. One rule I had was integration of systems – if our IT would not sign off on full migration of data and full integration of systems within eleven weeks the deal was off (industry-specific reason for the 11 wks) . Then we got a new hotshot MD who was god’s gift to the shareholders for a couple of years while he was making a total cock of the business. I never saw one person do so much damage to a company and the lives of the personnel involved. I just don’t want to think back about that.

pedronomix wrote: »

MNCs only buy small operations if ….Scaleable, and own an interesting market.

Agree with your comments, scalable and market were two of our drivers. What really drove us was quality control and a need to guarantee continuity of supply in our specialized field. In every market we had two suppliers, split roughly 80:20 so we could monitor price, quality and response. We’d change the mix periodically and as those suppliers grew (often as a result of dealing with us) it became quite obvious that they were taking the eye off the ball. That was because the owners were making a more than decent living and were looking for/had found another project/investment. That was a concern, so our strategy was to grow the business downstream, to meet them, suggest a joint venture using our technology, international contacts/spread and leaving them with a minority stake and a seat on the local board. A no-brainer, as they realized they had no alternative as in addition to losing our business we would enter the market ourselves as a competitor to them. We needed the local staff, contacts, knowledge and brought our skills to the party, so they inevitably took the better option and often did better as a result, including getting a nice payout.

What a lot of small companies do not realise is that the best ‘heads of function’ in a MN regard their bailiwick as their own little company and work along those lines, doing their best to keep HQ away from them until the last minute when a cheque or sign-off is required, so they have a lot in common with the entrepreneur / start-up owner.

ANewStart

I recently sold my company to a MNC. they were interested in our market position in Ireland and wanted to diversify from being a US company to being an international company. We had no real IP but are clear the leader in the Irish market for what we do

In most MNCs there is someone in charge of looking for potential acquisitions. Try and get in contact with that person and just talk about your company to them. In our case we were in contact with that person from near the beginning of the company to the sale (almost 3 years). I would think of reasons to get in touch... have them respond to an Irish public consultation, advice on a product development etc.

In the end our market position got to where it needed to be and they were in a period whereby they wanted to grow their european footprint. the outcome was good for all

also, something I didn't do but perhaps should have done, is there a IDA/move your international HQ to Ireland play? I believe the one of the big perks of acquiring an Irish company is the opportunity for this

SeanSouth

Actually, there is no magic formula to this and little or no mystique. If you believe that your business is good enough to be attractive to an MNC, you simply go ahead and make a direct approach. If you are correct and your company is attractive, the MNC will be in touch very quickly. Nothing more complicated than that. A very important aspect of all this is whether you can sell YOURSELF and they take a liking to YOU. If you as a person / promoter / business owner present a credible case of yourself AND your business, then game on. That should be enough to get the discussion started.

The Corinthian

Minor word of caution. About 13 years ago, someone I knew developed a UDDI server before pretty much everyone else. He approached a certain well-known software MNC with a view to selling them his creation and after two weeks received a polite response saying they would be happy to take a look at it.

Thing is, the email he got in response had done the rounds in the MNC, and someone had forgotten to trim all the trailing responses from it before replying to my friend. The last of these (a VP in development) decided that they should get a look at it, "take" any good features they find, then pass on any purchase.