Category: Business Strategy

Maximising value when selling a business can often mean selling to a customer or competitor and with the current market conditions as they are the return of the trade buyer has made this situation even more likely. Competitors are often the ones who are prepared to pay the best price, but this raises a number of tricky issues and careful management of the sale process is critical to achieving the right result.

Research, research, research
The value of research cannot be underestimated s, with the initial research playing a major role in the sale process and final outcome. The first step when selling a business is to prepare a list of likely buyers. Potential candidates need to be identified by in-depth research of the market the business for sale is currently operating in. This includes speaking to the major players, using the contact networks of the advisors and shareholders and utilising the international networks of corporate finance specialists to determine whether the likely purchaser will come form overseas. The next step is to agree a shortlist of parties to approach.

It is important to understand the strategies of the potential buyers, in particular their M&A plans. Some of this information will already be in the public domain but pre-screening buyers is an important step. The pre-screening process will involve speaking to, or meeting with, potential buyers to reach an understanding of their specific plans. This may even extend to asking questions relating to the area of the business that is for sale though not disclosing who the client is at this early stage

Understanding the key selling points of the business for sale and matching these to the strategies of the potential buyers is critical. There are key questions that need to be addressed at this time. Who is the business worth most to and what are the potential synergies available to the buyer – both sales driven and cost driven? Is there a gap in the potential buyer’s strategy, in terms of their product lines, market segment or geographic coverage that could be improved by acquiring the business that is potentially for sale. Which competitors would find the clients business attractive to buy, perhaps because it would rather own it than compete with it?

Lastly, it is important to understand the key individuals who drive the potential buyers business. Are they longstanding players? Perhaps they have a track record of buying and building businesses. Will they be able to gain support within their organisation to get a deal done?

What we often find is that the ultimate buyer is one of the first names on our list of potential buyers because it tends to be a competitor or a customer who ultimately sees most value in acquiring a business.

When Catalyst worked closely with a heating and plumbing equipment supplier the buyer was its major competitor.

The deal was quite a delicate one because we had to let the other side look at the details of the business but we could not reveal everything in the first instance. It had to be handled extremely sensitively.

The business was finally sold to its major competitor the outcome being a successful result for the vendors of the business who achieved an excellent price. The fit of the business with its major competitor made perfect sense but it was important to ensure that an advisor we understood the sensitivities of the deal without losing the buyer.

Tactics
In a transaction such as this you cant rush in and declare your hand too quickly when you are selling to a competitor and the same applies when selling to a customer. The first step is to prepare a tightly worded confidentiality letter which protects the client from potential buyers using information they learn from their discussions with you. This would include preventing them from using such information to target staff and customers, for example.

it is also imperative to hold back sensitive information until the last minute. Customer information is one such area, as it is vital to head off any attempts by the acquior to approach the customers of the business that is for sale until late on in the sale process. It is also at this stage that it will be important to make sure that there is a synergy between the two businesses. It should be clear that the two cultures are going to be a good fit and that all of the key individuals will be happy in their new roles.

Selling a business to a competitor or to a customer can be highly sensitive and fraught with potential pitfalls but, with the correct guidance from experienced advisors this may be the best route to take to meet the shareholders objectives.

Everywhere you look, there is competition. The software business is not any different. It is very competitive. Business that are part of the trading industry are constantly looking for ways to come up with products and services that can lure the customers to their companies. Getting the best software developer is a strategy that companies use in order to achieve their goal. This is why Internal Interface Testing is a process that they invest in.

Internal Interface Testing is a very important method for all developers. This is because they test the product that they are going to introduce the market with it. The whole point behind the testing is that they can figure out the possible errors if they go on with the product. At least they can already predict whether the item that they are selling is worth introducing to the market or not. If, however, the Internal Interface Testing requires positive results then this means that the business needs to improve its performance. By using the software effectively, the company can make the most out of the interface testing.

Software tests have evolved throughout the years. It is possible that some applications have to undergo different testing process. The main goal is that it can be perfected. The more comprehensive the internal interface testing, the better the web interface testing can do for the company. This is why software engineers require the user interface testing for any company.

Internal interface testing is composed of images, features, commands, and messages that bridge the gap of the product to the end user. In the user interface testing for the business, there are revisions based on the feedback of the user. This very method is said to be effective when it comes to perfecting the program because of the users participation in the whole application. It is very important to note that the program is saleable because it is user-friendly. Therefore, the input of the user is quite an essential data which developers use.

On the other hand, internal interface testing can be used in two ways. The first is through the main function of the whole user interface testing. In this method, developers conduct the tests that show the function of the program to come up with the errors of the actual business. The second is the internal components of the internal interface testing. Through this, the software engineers develop the tests that check the internal operations that should be carried out by the software.

Finally, black box testing is always relative to the internal interface testing that are performed on the interface of the program. It not only uncovers the errors, it also shows whether the functions of the programs applications are doing its job or not. In other words, the web interface testing is correctly accepted and corresponds with the output that is produced. This testing examines the fundamental components of the application.

In conclusion to this, all the software firms adopt the web interface testing to develop the different approaches needed for the company to have the testing methods for the business.

Starting a new business? Introducing a new product or service to your current business? Before embarking on either, strategic consideration should be given to potential barriers of entry to the market – and how you will position yourself and develop a competitive strategy to overcome them. Porter’s 5 forces model of industry analysis is an excellent tool that could help you decide on strategy and ascertain whether your business may achieve success and profitability in a particular industry. >

Potential barriers to entry to be considered include:
Capital Expenditure
Brand Loyalty
Cost Advantages

Capital Expenditure can scupper businesses before they even start. Do you have the capital necessary to penetrate your industry of choice? The size and scope of your business will play its part here. How much will it cost in start up expenses, e.g. equipment, premises, distribution, etc.? If you are entering a low barrier industry, such as setting up an after-school activity, capital expenditure will be minimal. Setting up a bus company on the other hand, would be considered a high barrier to entry as a great deal of capital expenditure will be required to buy buses, employ drivers, mechanics and other staff members, the cost of buying an operating licence, and so forth.

Brand Loyalty can make it very difficult to penetrate established industries even if you consider your product or service to be superior to that already offered in the market. However, customers can be extremely loyal to their favourite brand. They may need a great deal of persuasion to even try your product never mind abandon their favourite tried and trusted one. Marketing costs could prove expensive!

Cost Advantages of large businesses can help sustain their competitive advantage in the industry. Capable of mass production and/or providing services to a huge client base,they can easily undercut new businesses by lowering their prices, thus effectively thwarting potential new entries to the industry. New businesses are deterred because they have little hope of being profitable trying to match or beat these lower prices. Could you afford to enter into a price war with the bigger players? Remember, they will in all probability have the resources and the capacity to absorb any short term losses they might incur until you can no longer compete.

When considering your business potential and strategy, bear in mind that -Barriers to Entry’ is just one of Porter’s 5 forces of industry analysis and should not be considered in isolation from the others: competitive rivalry, supplier power, buyer power, and threat of substitutes.