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Sherpa Growth Insights

This blog is for owners and executives of growth-oriented businesses who share our growth mindset and passion for building value. Here, we share insights and experiences in our growth journey, things we learned with or from our clients, that can help you reach your next mountaintop. Enjoy!

GROW TO SELL

Posted on: July 10th, 2019

When weak revenue trends depress your company’s valuation, grow it to sell it.

Successful owners or executives know how to run the business well. But when it’s time to sell or pass the business to the next generation, we can feel stuck or overwhelmed, even more so when revenue trends are soft, lowering the business’ valuation and selling price, putting your family’s financial security at risk.

A few years ago, I met Henry, an owner who had been successful for decades. He had acquired good customers, built an impressive operation, recruited loyal employees and developed decent processes – yet growth had flat-lined, Henry was stuck, and he knew it. Without revenue growth, he could not attract a selling price that would bolster his retirement security. Henry needed to grow to sell.

Our first meeting after some introductory video calls lasted about four hours including a delicious lunch that allowed getting to know each other. I had brought along a gentleman from his industry. Henry and I liked what we learned from each other, and a three-step process evolved, a good recipe for owners who wish to sell their business:

  1. He asked us to do a week-long evaluation. His answers convinced us we could add $10M to his revenues within three years and within short order quadruple his revenues, profitably. Henry challenged us to write a detailed roadmap, to demonstrate how activities would create new revenue growth, when, by whom, and at what financial cost and benefit. We obliged with an extensive (100-page) competitive analysis, a small list of prospective new clients (all whales that would value his unique selling proposition), sales and marketing activity timelines, and detailed P&L forecasts.
  2. We spent year 1 building a foundation for growth with Henry and his team: design work (to demonstrate the offer in a quick and compelling way to prospective clients), process workshops and a commissioned sales force that could, with accountability and sales support processes, transform client/sales rep input into quotable output and PO’s.
  3. In year 2 we executed, executed, executed: sales reps hustled for appointments, the design work made believers of both sales team and prospective clients, and the powerful alliance opened 6 new national accounts that wrote some $4M of PO’s in a highly competitive environment. Henry’s commitment to grow to sell delivered performance which impressed his customers, new and old, and the trajectory for growth was built.

It was a pretty simple recipe:

This approach led to 3rd year client commitments that surpassed our original forecast for new revenue of $10M by 40%, which encouraged Henry’s investors to finance continued growth – leading to a company selling price many millions of dollars higher, and Henry’s family more secure – than before the four-hour meeting at the beginning of the story.

Grow to sell can be a simple process, if mixed with trust and collaboration from beginning to end, and a commitment to strategy and execution that is fueled by an outsourced capacity for growth.