CDI Global

To Sell in 2021 You Must Take Share to Regain Value!

The problem facing many businesses and their owners is how to regain or accelerate revenues and earnings in 2021 after a COVID-19 affected 2020. Those that figure this out will ‘take share’ (market share) and create significant value.

After nearly a year of playing defense, it’s time to get back on the offense to achieve liquidity in an M&A event. How you plot a course to regain value and achieve exit velocity – the discipline and art of increasing revenue and earnings on the way to a partial or full liquidity event – is crucial to achieving your dream M&A outcome.

Even for those companies not seeking exit, or just getting started with exit planning, a grow or die mentality will serve you well in 2021.

We find three different types of corporate leaders and entrepreneurs arise when hit with adversity.

  • Survivors – do just that; hang on and hope customers and business come back while operating in the status quo.
  • Reactors – attempt trial and error experimentation to revive share. Management may or may not come back with same core values and value proposition as pre-COVID-19.
  • Accelerators – proactively ideate and execute a growth strategy will achieve exit velocity and indeed take share amidst market disruption.

If taking share sounds too predatory to you, perhaps decide who you will be within your segment: a market leader, market neutral or market laggard. Acquirers will assess your COVID and post-COVID management capability by how you rank against your peers.  Proactive growth mentality will be perceived much more positively than a ‘wait and see’ approach by prospective buyers

Here are the practical steps to move forward and accelerate in 2021:

Step 1: Figure out which type you are at present. With your team, conduct a full assessment of your marketing, sales, and customer conversation acuity. Be brutally honest, forthright, and focus on solutions to your observations. This should include what you will do and equally important what you will not do going forward. Expressed differently, what resource allocations are not yielding growth and contributing to growth and profitability? Know yourself and set the benchmark of where you are now.

Step 2: Examine your competition, specifically their reactions and market moves. Are they adding or shedding people and plants, adding services, or contracting? Are they introducing new offerings in response to a changing marketplace? Run a SWOT (Strength, Weakness, Opportunity, and Threat) analysis on your competitors, eliciting everyone in your company that has knowledge of the competition and the market. Use your salespeople and speak to your competitors, customers, and suppliers.

Step 3: Examine the critical functions and approach with a “take share” philosophy. What one thing will you commit to and where will you invest? How much investment is going back to your existing customer base vs. attracting new logos (new business)? Quickly probe enemy lines with teasers of your new offerings or service areas. These do not need to be bold, dramatic, or bet the farm moves. Small yet meaningful focused efforts may be enough to take advantage of some disruption in supply markets. Test and re-test for adoption and in this process you will learn more of what your prospects want and need in 2021 as their businesses have likely changed as well.

This process would also be incomplete if you did not look at opportunistic buy-side acquisitions or look to acquire distressed companies as part of an inorganic growth strategy.  Buy vs re-build is a valid response given the COVID-19 market disruptions to otherwise good companies. Weaker companies with good assets will exist in most markets.

Step 4: Communicate internally and externally: It will be critical that you communicate across all areas of your organization exactly which hill you are trying to take and why. 

Step 5: Execute flawlessly and tirelessly. The adage “execution eats strategy for breakfast” is true now more than ever when it comes to taking share and overcoming competition. Having tested your offerings ensure your delivery teams are flawless in their execution. 

Step 6: Keep score: If your plan is to position your company for growth again or achieve exit velocity, a ‘take share’ in 2021 mentality is required.  Buyers offer premium valuations to companies exhibiting an “up and to the right” growth trajectory, exhibiting a 10% CAGR (Compound Annual Growth Rate) Growth.  Having established a COVID-Baseline, keep meticulous score and rely on the numbers to make course corrections.

Private equity and other acquirers will surely ask, “How did COVID effect your business?” and most importantly, “What did you do about it and how did you achieve market leading growth coming out of it?”

While we understand no CEO could have anticipated the COVID-19 Pandemic, those with an accelerator mindset and looking to “take share” will be closer to achieving a liquidity event than those waiting for their markets to recover fully.

 

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