Thinking About Your Exit?

Agency boss Ruth Shearn believes there is a solid commercial argument for increasing, not decreasing, your marketing spend in the three years before you exit your business.

If you’re starting to think about selling your business, whether to a trade buyer or via a management buyout, you clearly want to make your financials as healthy as possible to attract the best possible multiple.

Chances are, as soon as you mention your plans to your accountant or other trusted advisers, they’ll tell you to get your house in order and improve profitability.

Easy to say.

They’ll probably suggest you reduce overheads by renegotiating costs with suppliers, freezing salaries, putting a stop on recruitment and training. They’ll also tell you to improve your bottom line by dropping your unprofitable clients and increasing your prices.

All pretty standard stuff that you undoubtedly know already.

What most calculator-wielding advisers tend to overlook is the one essential component needed to successfully prime your business for sale – marketing. Having advised owners of SMEs for nearly three decades, I categorically know that ramping up – rather than decreasing – your marketing activity in the pre-sale period has sound commercial benefits and can have a hugely positive impact on perceptions of your business.

Only last week, I was taken out for a celebratory meal (and a few drinks!) by a client who’d just sold his business for several million pounds. He wanted to thank me and openly acknowledge the contribution our marketing activity had on his successful and lucrative exit.

He and his business partner are enlightened chaps. Aware of their intention to exit, they appointed us three years ago. They took us into their confidence, shared their business plans with us and we were able to tailor their marketing accordingly.

A combination of the usual tactics – website, SEO, email marketing, advertising, trade shows, newsletters and lots of editorial – helped attract plenty of sales enquiries and new customers.

Crucially, we also started to profile the business in select business and trade media – talking about its growing success, the innovative services and products it was introducing, and the new contracts it was attracting. This put it on the radar of those in the legal, banking, investment and corporate finance community – basically, anyone with a vested interest in deal making.

And guess what? Several competitors and investors started to show interest, along with companies from overseas who wanted a foothold in the UK market.

Our client ended up with six companies competing to buy the business.

Now please don’t for one-minute think I am deluding myself that this was all down to us – of course it wasn’t – but without marketing and PR, our client might have achieved a lower value.

And this is not an isolated case. It has been a recurring theme for the 26 years RMS has been in business. This year alone, four of our client companies have been acquired in significant deals – the sectors have ranged from manufacturing to technology to confidential data destruction. In each case, we had been appointed by the directors with the specific brief of attracting more customers and raising their profile in the deals marketplace.

In each case – and this is the key – they have said in retrospect that what we did to support them was a key component in their successful exit.

In the early days of my career, I put professional deals advisers on a pedestal and believed they were cleverer and contributed more to commercial life. What age and experience has taught me is that those of us in the ‘creative’ industries have an equally crucial role to play.

Unlike many advisers whose default setting is to look for ways to cut their clients costs, we look at how clients can attract more business and grow – different sides of the same coin.

Put simply, marketing and PR positively changes the fortunes of businesses, organisations and individuals. It is not abstract, intangible or unnecessary expenditure – it is a vital component that, in the right hands, delivers a quantifiable return on investment.