Gregory Shepard advises founders to contact their IAP (Independent Advisor Panel) or potential acquirers now, not when you need to sell. Learn what drives their valuation multiples and what growth, margin, and retention metrics matter most to them before you build.
Chapters
I was sitting in here and getting ready to do some barbecue in my little bar out here, and I had this thought that I thought I would share with people. A lot of people are afraid to actually approach the acquirers, but you have to remember that the people in corporate development at these different companies, the main thing that they're after is a pipeline, right? These people are paid just like salespeople to build a pipeline of companies to acquire. Now, if you approach them and you have a conversation with them, you have to realize that you're actually helping them. So it's important to make sure that you contact them and just simply say, hey, listen, this is the company I have. Is this a company that you guys would be interested in? And if it is, what are the valuation drivers that you need? What is the multiple that you guys— how does the process usually happen? And talk to them. A lot of entrepreneurs are just afraid to do that. I got to be honest with you, I do it right Right away. Figure out once I get my ideal acquirer profiles built out, I go right to them and I call them and I say, can I talk to somebody in corporate development? If they don't have somebody in corporate development, you have an issue right there. They have somebody in corporate development, it means that this is a process for them and you can get through to that person and ask them a series of questions like that. What is your growth margin retention expectations? Out of growth margin and retention, Which one of those things is the primary that you're focused on? What are the multiples you pay? Are you paying on top or bottom line? So on and so forth, so that you understand how to build your business to suit the acquirers that you plan on selling to in the future. You know, it's like, I always tell people, I'm like, not understanding your acquirer of your business is like building a product without having a customer. Essentially, your whole business is just a product to them. You know, they're trying to sell your product to their existing customers, so your entire business is just a product. So you have to think about who is ending up with your business, just like you think about who is going to buy your product.
