Mergers and acquisitions are delicate, detailed, and (at times) daunting. Here at Stage Left Partners Ltd., we’ve learned many essential lessons about the intricacies of the process which we are keen to share.
In this series of lessons learned, we address key learnings in the areas of timing, people, finance, legal and customers to provide a sense of how to prepare and what to expect if you are considering selling your company.

customers, people

Lesson #5 – The Importance of Customers

We’ve covered a lot of ground in our Lessons Learned series including timing, people, finance, and legal considerations.

The last lesson in this series (but certainly not the least) is to pay close attention to customers.

Evaluate Customer Health

In our experience, finding a way to evaluate and indicate the health of customer relationships can be tricky when you are not being public about selling the company. But the buyer will want to know if the company’s major customers—those that represent 50 to 70 percent of the business—will continue doing business with the company after a sale.

Some indicators include: Do you have long-term contracts in place? How long have the customers or clients been with you? Are they increasing their spending with you year over year? Providing data that answers these questions gives you the ability to show healthy client relationships that build confidence in the overall health of the business.

Speaking With Customers

Ideally, the buyer would like the chance to speak with these customers and discuss ways to expand their relationship after the sale. But sellers don’t always like this approach. If you are in this category, consider doing customer surveys as part of your ongoing marketing and customer service or employing an anonymous third-party customer research team that can survey your company’s customers and produce a report on their status and the projected revenue from those relationships.

Transparency is key, but there are ways to find information that won’t force you into disclosing it too soon. The more information you can provide about your client relationships, the more value the buyer can place on them.

That’s a wrap on this series. Have questions on these or any other topics relating to selling your business, we are happy to help.

Our expertise at Stage Left Partners Ltd. helps us find solutions that work for everyone involved in the M&A process!

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