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How attractive are we?

Formalizing and implementing a long-range transition strategy can mean more value now and later. "Most business owners fail to maximize value … they leave money on the table," says Dave Power, manager of mergers and acquisitions at LBMC, a Leading Edge Alliance firm.

"There's not a cookie-cutter approach to mergers or acquisitions," he says. But there is a singular starting point—each company needs to ask itself where it is now and where it wants to be. Then, does either an acquisition or divestiture strengthen or weaken long-range goals.

Power talks about one particular business owner who planned ahead and benefited handsomely. The client owned a large produce distribution company based in Tennessee. Long-range planning revealed an opportunity to extend services to the Carolinas before Sysco, a multi-billion dollar competitor, had done so. The expansion would stretch resources and would not be easy, but it would give the company a significant advantage if successful.

The company chose to expand.

"He looked at his competitor's market footprint and saw a unique, multi-dimensional opportunity. The expansion offered immediate market share growth, and it also offered a possible exit strategy if Sysco wanted to acquire instead of compete," Power says.

He explains the man also knew that if no offer came from the likely buyer, he would need to refocus his efforts from expansion to cash-maximization and plan an alternative exit strategy since there would be far less likely acquirers at that point.

Sysco bought the company, and the owner is an important part of the future growth of the combined entity.

"Most business owners are not so proactive," Power says. "The earlier you look at some type of transition, the more things you can do to optimize your situation later."

Power details a more typical, reactionary approach that still had a good outcome. Worth Industries was run by second and third generation owners. The softball products manufacturer found it more difficult to compete as competitors embraced manufacturing in China. If Worth wanted to remain competitive, it needed to manufacture overseas.

K2, a large ski manufacturer, had recently bought baseball product manufacturer Rawlings as a way to better manage its own seasonality. Shortly, a dialogue ensued between K2 and Worth too.

"K2 had the cash and Asia manufacturing know-how, and was interested in consolidating the summer sports markets. Worth could either go to China or ally with a company who already had, so they explored the sale to K2. It clearly made sense," Power says.

So where did that leave the former owners of Worth? They received a strong sales price for their previously illiquid equity. K2 also retained them to operate the entire softball/baseball division, which is three or four times the size of the company they sold.

Who do we want to buy the company?

Preparing for selling the business is essential no matter how far away that day is, Power says. He identifies two general categories for buyers—financial and strategic. All business owners should ask today what kind of buyer they want for their company.

Financial buyers may not have experience running the same type of business, but they do know how to run a business. They typically view the sale as a financial decision based on the company's growth potential, its track record and ultimately its available cash flow to pay off debt, Power says.

Strategic buyers may be suppliers, clients or competitors who are interested in the business for strategic reasons. They ask how the acquisition would enhance their products/services and identify the cross-sell opportunities or they look for synergies in vertical integration of supply lines. "Often time they assign a different value, that is a lot higher (than the financial buyer)," Power says.

Both financial and strategic buyers take a sophisticated look at the underlying business. Power says all buyers evaluate technologies being used, expenditures, investments in human resources and availability of qualified managers to lead. If they find deficiencies, they will assign more risk to the purchase and thus discount the company's value.

What extras would earn loyalty?

To gain or keep market share, businesses should consider loyalty programs or simply identify ways to make it easy for people to patronize them, says Lebewitz of Lurie Besikof Lapidus.

Most consumers are familiar with loyalty programs. A frequent moviegoer Lebewitz is a member of a national movie chain's club. He signed up, got his card but he never carries it even though he must present it to participate.

"If it meant anything to me I would remember the number or carry the card, but I don't use it," he explains. "I do, however, remember the movie chain."

That said, Lebewitz thinks loyalty programs can still work. "It's worth a try to offer discounts, coupons, freebies depending on the product, the easier, the better," he notes.

Also, don't just think loyalty programs are for consumer-oriented companies. Business-to-business programs can work well too.

Lebewitz says companies should explore ways to make it as easy as possible for their customers to do business with them. For example, the company could validate or offer an hour of free parking if it is located in a place where parking can be a headache or expensive. Some service firms even offer valet parking for their clients, he says.

Loyalty to the community also can be an important way to establish or cement the company's presence with its customers. Businesses can tie into charities locally, nationally or internationally. "The general public wants to support organizations that give back to the community," Lebewitz says, "and it's the right thing to do."

Go guerilla?

By its very name, guerilla marketing sounds nontraditional. Consider it out-of-the-box marketing taken to a new level and it isn't just for avante guard businesses. "Guerrilla marketing is undoubtedly becoming much more popular and accepted by the larger corporate community," says Jim Audette, managing director of Street Factory Media, a client of Leading Edge firm Lurie Lapidus Besikof.

"Many of our clients could be considered conservative—banks, insurance companies, airlines, utility companies, etc.," Audette explains. "By the very nature of the business they're in, they would have at one time shied away from guerrilla marketing. However, now they realize the importance of coming up with unique ways to engage consumers on a more personal level in their own environment and in unexpected ways."

Street Factory Media executes the guerrilla marketing ideas of advertising representatives from both product brands and agencies. It makes the on-paper ideas come to life, Audette says.

Some of its executions include staging a live 30-second street theater "commercial" in a busy mall, creating pop-up ice cream sampling stands on a busy downtown street corner and planting 800 flowering shrubs to spell a message along a country highway.

Street Factory Media's work is getting results for the company and its clients, Audette says. The young company's dramatic growth in the last few years has come from satisfied customers who return and refer.

One such client is Crispin, Porter + Bogusky, an agency marketing Slim Jims. Audette says Street Factory Media executed a street branding campaign that called for hundreds of 3-foot wall clings of the brand's icon, Snap Fairy, to be "wild-posted" in strategic spots throughout test markets.

The street campaign was done in conjunction with a larger traditional campaign that included TV, print and outdoor advertising. Audette reports that "in the markets where guerrilla advertising supported traditional methods, sales were 30 percent higher."

No matter the mode, growing is what any business leader interested in success wants. Charting a new growth path—whether you go guerrilla, identify ways to sell products for less or plan for an exit (the company's or yours)—all starts by asking those not-so-traditional questions. e