Know Your Worth
Bernie Dixon, chairman of the number 4 angel network in the country, Atlanta Technology Angels, says, "Eighty percent of a new company’s value is its CEO." Simply put, it doesn’t matter what intellectual property you’ve filed, how many beta customers you had, or who your seed investors were.
Early stage investors will determine your company’s valuation in large part based on the founder(s)’s passion, ingenuity, and aptitude for success. Similarly, potential acquirers are often just as interested in your leadership team as they are your customer base.
The PR industry has been making executives appear marketable for decades. We call this phenomena fancy terms like “executive visibility” and “industry leadership,” but really, all it means is that a CEO is one of the most valuable assets your company will ever have. The CEO’s personal marketing plan should be crafted with as much care as the product’s marketing plan. This includes a calculated mix of social media presence, leadership awards, speaking engagements, published content and press appearances.
Tell Them How You Stack Up
Everyone has an opinion around the number of phases that are involved in a M&A, but for the sake of this article, let’s use Corum Group’s eight-stage approach. The first stage is “preparation,” but it might as well be labeled “storytelling.” This is where you make your case for why you should get the valuation you desire. It’s this phase where you tell your potential buyers why they want you.
Valuations are determined by a range of dynamics; but market growth, market positioning, and levels of competition are the fiercest indicators of a company’s health and potential. These three indicators can be brought to life in Stage One of the M&A process through a variety of PR tactics. For example, perhaps your company is the first and only product in the market addressing your buyer’s needs.
Make sure that messaging is plastered throughout your copy and collateral. Or, perhaps you’ve picked up notable recognition from analysts, like a Gartner Cool Vendor Award, and rave reviews from press. If so, make sure these highlights are woven throughout your website and leveraged in all marketing communications. Finally, if your company does have competition, make sure you’re bringing your competitive advantages to life through storytelling.
Create case studies that demonstrate why a customer left your competitor for you. Obtain quotes from analysts on your dominance; and measure your company’s share of voice compared to your competition in the media.
Show Them the Customer Love
Speaking of customers, they carry a great deal of weight in determining your company’s valuation. This is why customers are interviewed during the due diligence process. But don’t save your customers in your back pocket just for transaction periods. Leverage them throughout your company’s life cycle to build a narrative about your market dominance and momentum.
I’ve seen customer stories drive inbound investor interest and expedite fundraising deals in a blink. Here’s how:
- Ensure your marquee customer logos are prominently displayed on your website and sprinkled throughout all marketing communications.
- Craft as many case studies as your marketing team can handle. Remember to obtain publicity rights up front in your customer contracts so you can have as broad of rights as possible. Even if you have to negotiate elsewhere, it will pay dividends for you long term.
- Distribute momentum press releases a couple times a year, touting your customer wins and milestones. For example, perhaps you reached 5 million app downloads last year, or maybe you scored contracts with five Fortune 500 brands last quarter.
- Apply for awards with titles like “fastest growing,” which will add credibility to your growth.
Whether you’re gearing up to pitch your startup to angel investors or preparing to sell your 10-year-old business, public relations is the secret sauce to obtaining the valuation you desire. As two-time entrepreneur turned venture capitalist Mark Suster says, “Great PR could add $10 million to your valuation or increase your chances of closing a round 2x, and either case is a reason to make sure you have good press. It’s much harder to get funded as a company nobody has heard of.”