In January 2001, I was recruited for a VP role just outside the DC beltway, requiring the relocation of my family and the sale of my home. Not content to concede the customary 6% fee demanded by realtors, I discovered a paperback entitled “How to Sell Your Home in 5 Days,” and a week later took the plunge.
The foundational premise of the book was the assertion that since the value of a home is ultimately driven by market demand, the best strategy for getting top dollar is to carefully orchestrate a demand-driven “Buying Frenzy” comprised of a tiny universe of highly-engaged buyers with a fixed horizon for purchase.
By strategically designing a fully-transparent and time-boxed buying environment – similar to a live auction – the market forces of competing offers were able to play out in full view, with the final bid representing the highest indication of true market value.
The additional lifestyle benefits of this staged transactional scenario designed to crescendo within a compact 5-day window included needing to only clean, prep, and vacate my home for one weekend, and having a ready slate of active alternate buyers (who also submitted offers – just not the winning one) should the top bid fall through or be disqualified for failure to perform.
The Dreamriver Group specializes in helping business owners get top dollar when selling their company by focusing on the 8 Key Factors buyers prioritize when pricing companies for purchase. After studying over 55,000 businesses, our Value Builder System partners have discovered that sophisticated buyers consistently pay more – often DOUBLE – for companies that can clearly articulate the compelling ongoing value resident within their organizations.
While selling a home and selling a business are markedly different transactional models, there are a number of striking similarities consistent in driving successful outcomes within each domain.
Preparation and Patterns
To help “Sell My Home in 5 Days,” the author outlined an aggressive plan for effectively “staging” my home for optimal pricing. Many of the recommendations focused on the psychology of initial impressions and curb appeal, with the understanding that if the first thing a potential buyer encounters is a rusting mailbox or broken doorbell (things they can see), it’s only natural for them to assume deferred maintenance and/or neglect in other more important areas they can’t see. With a little elbow grease and a few trips to Home Depot, these small issues can be remedied at a minimum of cost but with a significant impact on buyer perception.
The Dreamriver Group process has been designed to prepare business owners for the sale of their company by taking a holistic approach, with the understanding that sophisticated buyers will be evaluating them based on a variety of factors that we call “Facts, Feelings, and Fortunes.”
Facts – In addition to the hard cold facts of trailing balance sheets, headcount, revenue, product lines, etc., buyers want to understand the structural underpinnings and organizational dynamics resident within a company. They want to know the true chain of command, how heavily involved the owner is in the day-to-day operations, and how hands-on they are regarding direct interaction with key clients.
Feelings – Buyers have consistently expressed an interest in going “beyond the numbers,” analyzing a portfolio of spreadsheets and data points and then overlaying them with regional, national, and industry-wide trends to extrapolate competitive scenarios which might benefit them as either a strategic or financial buyer. Just like the curb appeal of a house mentioned earlier, a buyer will be internalizing both cosmetic considerations as well as cultural cues which reinforce perceptions regarding credibility and corporate-wide rigor as an indicator of organizational heath and associated investment risk.
Fortunes – Fortunes represent all the fuzzy math – combining both facts and feelings – to establish a pattern of growth and a trajectory of expansion within an industry or vertical for a specific company. The truth is, written offers and buy-out multiples are calculated as a reflection of expected future earnings based on a track record of historical performance and a belief in the continuation of these results into the future.
Dreamriver Strategy
Because patterns of success are weighted so heavily in extrapolating future earnings potential, Dreamriver coaches our clients over the course of 12 months through 12 modules of business strategy designed to groom each area for the buyer’s eye by aggressively addressing easy “cosmetic” issues, as well as diving deep to remedy core issues capable of stopping a buyer in their tracks. Once these issues have been reconciled, we then consult with business owners to maintain these new best practices and reinforce these key patterns which influence the perceived value of potential buyers.
Closing the Deal
Once business owners have inventoried and assessed each of the 12 areas of critical consideration in our Value Builder System, and have satisfactorily resolved and remedied each process and procedure, they find they are now in the enviable position of being “In Control.”
When selling my home with a compressed timetable, I was forced to introduce an element of urgency to bring buyers to the table to compete for the winning offer, and I was resigned to accepting the offer of the highest bidder. Once the Value Builder System has been introduced and scaled within an organization, however, our business owners consistently find that they’re earning more money with less work, and thus no longer have the burden and immediate need to “Sell at any price.” In addition, once a company has successfully powered through our value-building process and streamlined operations for ongoing scale and profit, they regularly catch the eye of buyers, and often have the luxury of considering multiple offers and leveraging that visibility to maximize multiples and exit on desirable terms.
