CHANNEL PARTNERS — The IT channel is changing rapidly and partners need to ensure that they position themselves for growth and maximized value if an exit is on the horizon.
That’s according to Kevin Ramsier, managing partner and CEO of Vesticor, an advisory firm to closely held companies in the lower and middle market. He was a keynote speaker at the Channel Partners Conference & Expo in Las Vegas on Thursday.
Ramsier said companies need to focus on maximizing business value in a changing economy, which is undergoing an unprecedented transfer of assets.
“In this business, many, many people are going to exit over the next 10 to 15 years," he said. “Most businesses fail to sell, so what can you do if you’re thinking about that in the next year or 10 years to secure the fact that you can optimize the value of your business and get the most for what you’ve built, where you’ve put your time, effort and energy?"
Part of that is making sure you’re selling the right product mix, making sure that your products are relevant and in demand, and making sure that your operation is running smoothly, Ramsier said.
“When buyers do look at it and go through a due diligence process, they want to pay a high multiple for it," he said.
Reasons why businesses don’t sell include poor planning, poor marketing, other opportunities, lack of motivation, unrealistic expectations and inflexible buyers/sellers, Ramsier said.
“Most people don’t think about running a business with a value of the business in mind," he said. “The principles that we talk about on how to maximize value in a business are great principles to run if you never want to sell your business and you want to transfer it onto heirs or a different generation."
The risk involved with either selling or acquiring a company depends on the company, buyer and situation, Ramsier said.
“We’ve seen at the eleventh hour things fall apart and the buyer doesn’t want to proceed because of something," he said. “And on the eleventh hour sometimes the seller could say ‘I’m a little scared, when I wake up in the morning and my feet hit the floor and I don’t have to come in here, what do I do?’"
In many ways, the business defines the owner and to leave that behind, “that’s a big decision, that’s a big emotional decision as well, Ramsier said.