Tips from the Top - July 2017
How to Have Tough Conversations
I have found the following three approaches to help minimize potential anger and defensiveness when I am about to have a difficult conversation…Read more
Lessons Learned from the Acquisition Process
After five years of receiving multiple inquiries, some concluding with "not interested" and "let’s talk later," an industry competitor approached me on the possible acquisition of his firm. The competitor stated an asking price that he felt was fair for his business. Like most valuations by business owners assessing their own company, the asking price was far more than the value of the business. I told him he must get a business valuation to learn the real value of his business in the current marketplace.
I also needed to determine the proper multiplier of EBITDA (earnings before interest, tax, depreciation and amortization) for this type of business to calculate a fair price. After the valuation and review of his financial statements for the previous three years, I presented the buyer with a non-binding offer (letter of intent).
Some lessons I learned through this process include…
When looking to hire "second chance" employees (those who previously served time or were fired from other employers for cause), it is absolutely critical to have a built-in system of support. Otherwise failure is very, very likely.
Cart Before the Mission
The problem with mission or vision statements is that, as soon as they are hammered out and written down on paper, some companies assume they have been executed or achieved.
Log In a Lot
Make sure you know your log-in credentials for every single piece of equipment that requires passwords (machines, servers, computers, tablets) and log in to them quarterly to make sure they still work. This practice will surface any hacking, fraud or ransomware situations so you can fix them.
Effectively Lead the Follower’s Needs
I have learned from Ken Blanchard that, when we lead people, we need to match our style to the needs of the follower.
If they need a great deal of support and not much direction, we are supportive. If they need a lot of direction and not just support, we are directive. If we delegate to these individuals or, worse, to the people who need both support and direction, we are not going to be effective.
Delegate to the people who are highly competent and have a high commitment.
Listen for the Competition
Your customers will help keep you competitive. All you have to do is listen to them.