Actively managing a business disposition: Preparing for a sale
This is the third article in a three-part series on what CEOs, CFOs and other business leaders must consider in the various stages of a business transition. The first article looked at pre-acquisition considerations, and the second article delved into the realities of post-acquisition and the adjustments required under new ownership.
LESSONS IN CHANGE, EDUCATION, AND TRANSITION.
In the pre-acquisition article of this three-part series on active management I discussed the interaction between a general partner and the senior leadership of a company being acquired by a private equity firm.
You want to grow your business? That means it’s time to add more salespeople, right? It makes perfect sense. The more salespeople you have, the more sales you will have. Maybe not. One of the most common mistakes small and mid-sized companies make is adding sales capacity before they’re ready. Why doesn’t it work more often?
Let’s now shift to sizing the marketing budget and developing the metrics to gauge ROI. The first step is to determine as an executive team, CFO and CMO included, what the company should be spending on marketing relative to top line growth. Often, there is a reasonable sense, given industry and peer comparisons of competitive spending ratios. These can be adjusted based on events such as a major product announcement.
Let’s start by addressing what marketing is and how it’s evolving. It’s first of all, a collection of disciplines, not just one or two activities. Many people think of marketing as being advertising, the website, brochures, trade show events and associated trinkets. I would encourage you to think of marketing as a collection of interrelated activities that:
