Many major players in the technology industry have an acquisition mindset—some companies feature entire divisions focused on identifying and procuring the next hot startup. Entrepreneurs launching new ventures who are looking for acquisition as an exit strategy need to understand why companies are bought and how to best position theirbusiness within the market. The following include five tips from Rachael Qualls, founder and CEO of Angel Capital Group, to help get your startup in line to be acquired.
Having market appeal
Having an attractive product with customers clamoring for it is the first and foremost reason why any big company might be interested in you. Having a disruptive force in market may entice acquirers to give money for your project.
Make it essential
A product which serves consumers need could make your business the next big thing. If your product is essential to a consumer’s lifestyle or provides real bottom-line value to a business, it will not only be wanted—it will be needed. Acquirers find this attractive, as gaining customer loyalty and maintaining long-term relationships will help generate income on a regular basis.
The easier it is to consume, integrate and use your product, the more attractive you will look to the acquirer. Do not overpromise and under-deliver. The easier your product is to incorporate into a customer’s life, the more likely it is to happen.
Hire and retain the best talent
One of the main reasons big companies acquire startups is for talent. Good startups have great talent, but only a few do a good job of consistently raising the bar for their staff or thinning out those who made sense for a startup but don’t work well for a maturing business. By doing so, you will attract more talent and position yourself as an innovative company. This will further boost acquirer’s confidence.
Control the bottom line
The efficiency of your business talks a lot about your priorities. While working lean is the key, the amount you have at the end of every year to invest in company’s future increases your credibility with the investors and acquirers. Being mature about how you handle your business finances impacts the overall health of your business – make sure your team is making smart, strategic decisions with every expense. By keeping your costs low, acquirers will have a vision of your priorities and they will have more confidence in your ability to manage your company to its ultimate goal—financial and marketplace success.
Once you are making money off a customer base that can grow with a product or service that can scale, companies may start looking into the possibility of acquiring your startup.
Please feel free to share what other factors you feel are important for acquisition.
For more information on this topic, please visit: http://www.entrepreneur.com/article/229027
Thanks for reading, and until next time… stay WISE!