Tag Archives: Crossroads

Do You Merge, Sell or Revive a Business? Four Areas of Focus

Situation: A company is at a crossroads. They are no longer growing as they have in past years. The CEO is assessing alternatives including a merger, selling the company or restructuring. What are the essential questions to determine whether you merge, sell or revive a business?

Advice from the CEOs:

  • Do you really have the information to determine whether it makes sense to merge, sell or revive the business? The questions to ask are:
    • Is your core competency important?
    • Do you have the talent required to revive the business?
    • How much of your business is from repeat customers?
    • Is your platform still being used by a significant number of companies, and are they likely to shift their software soon?
    • If the answers are favorable, then the only remaining question is whether you have the energy and inclination to continue.
  • Having developed a profitable business model, why would you give up control or ownership?
    • Tighten up the business by focusing on the basics and turn the company around.
    • Identify where you can make money, and
    • Determine which portions of the business need to be restructured or eliminated.
    • Essential questions are:
      • Do you have a clear picture of where the profitability lies within the business?
      • Do you have a clear statement of your key competitive advantage – your “Main Thing”?
      • Can you establish a pricing strategy that pays you fairly for the value you provide?
  • Look at bench time among current employees.
    • Identify, and fully utilize the most important contributors, perhaps by giving them additional responsibilities in other areas.
    • See that all retained employees are fully utilized.
    • Eliminate those who are on the bench the most, or transform them into contractors so that you only pay for active time.
    • Utilize contractors to fill the “full service” slots that are important to your service offering but which do not contribute significantly to your bottom line.
  • Most importantly, reformat your role so that you are doing that which you truly enjoy. Your own enthusiasm and passion are the most important long-term drivers for your business, and will be the most important motivators to your staff.