How to set up your business to be acquired

I never expected to build a company that could be acquired, but it sure was a fun and challenging process. Some companies are founded with that goal from day one and some, especially social impact companies, may feel like acquisition is the enemy. Here’s my best advice: operate from day one as if you plan to be acquired one day. 

That may sound ludicrous to some of you, but let me take a stab at convincing you why I think this is the best approach. 

  1. Long term vision – For those aiming to build and scale a social impact business, you will likely desire to have a positive influence in the world through your endeavor over making strategic business decisions in moments where there seems to be a tension between those two outcomes. I believe they are two sides of the same coin, but there will be tension from time to time which is very healthy for the business. If you run everything through a filter of a potential acquisition on the horizon, it will balance out the short term decision making that arises from moments of tension. You will not and should not always choose the profit over people every time there is a decision to make, but thinking this way will make you more aware of those areas where you need strong justification for your actions. 
  2. Strategic Accountability – Some will be concerned that social impact will be removed from your business if an acquisition occurs. We always approached our staffing business serving refugees as a glass of ice cold refreshing lemonade. Once the water, lemon juice and sugar have been stirred together to make the lemonade, you cannot separate it back out. You can’t remove the sugar or it’s no longer lemonade. No one could acquire our business that did not want to specifically engage the refugee workforce because it was so deeply engaged in our business model. Without that aspect it would not work and would have little value. I encourage you to do the same to your business. Embed the social impact so deep into your business model that “when another company with greater resources acquires us one day, that will not be able to separate out the social impact we achieve from our business model.” If you plan to always be privately held, you’ll never do the hard work it takes to embed your impact within the business model. Thinking about an acquisition on the horizon, even if it never happens, will help you make strategic decisions today for how you grow and scale your business. We didn’t know how to do staffing without refugees and the company who acquired us realized and respected that value. Though I, the founder, no longer own the company, the impact on the refugee workforce has doubled since I was leading the charge. 
  3. Financial Accountability- As soon as possible, get your financials as close to US GAP standards as you can. This seems like a minor detail especially the growth stage but it will pay dividends in the future. Years of clean, consistent financial reports instills a ton of confidence in your business from potential investors and vendors you want to engage. Most people only start thinking about aligning with GAP standards when they are getting close to a transact event. If you put it in place now you will be so glad you did. It’s rigid but will make you look and sound wise beyond your years if you ever have external conversations. If you wanted to build a company in Latin America, you would not create your own version of Spanglish and expect everyone there to understand it. You would learn Spanish so that as many people as possible could understand your vision even without you explaining it with lots of hand motions! 
  4. External accountability- Pull together a board of advisors (unpaid with no fiduciary responsibilities) as soon as possible. Always have a mentor or coach you are making time to process your personal growth and the business growth with. Find an accelerator you want to aim for and try to align yourself to their entry standards. Join our virtual coaching groups so you can have some people on the journey with you. This may sound overwhelming, but various levels of external accountability will propel you forward when you don’t know what to do next. Companies thinking about acquisition have all these resources at their disposal so why not do that from the start? Pulling people into the journey with you can increase your awareness and lead to major breakthroughs in the early building and scaling stages. 

Did I convince you? Statistics show that most companies, especially social impact companies will never be acquired. In fact, statistics show most will fail. To survive long enough to reach the level of impact you want to see, requires you to make decisions as if an acquisition is on the horizon. You will not regret it. 

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