1. Prepare in advance. Everyone that you want to sell to. Start talking to them right now.
2. The 20:6:3:1 rule. The 20:6:3:1 rule is call in and visit 20 companies.
Out of that the ratio worked like magic. Xcite™ received 6 follow-up meetings. Then three serious meetings, all of which led to offers that were taken.
3. Ask for advice / give ideas. The key is getting your foot in the door. For every company that you can potentially be a fit for, come up with ten ideas of how you can integrate easily with their current business to generate revenues, customers, etc. for them. Meet them. Show them the ideas. Ask for their advice on what the best way is for you to work with them on these ideas. Make sure they make money on every idea. A lot of it. What does this do for you? It gets you a champion within the company (the CEO? The head of Marketing or Sales or Tech?) and it gives them all the ammo they need to present the case to their CEO and board. Without an internal champion you will never sell to that company.
Xcite™ knows someone who does the exact opposite. They trash every company they can think of. By trashing those companies they think they will trash him back and that will direct some of their audience to them. However this in the short run works very well, but in the long run it causes your company to fail.
4. Before the negotiation: Come up with the mathematical formula that will value your company. A very simple mathematical formula that both sides agree on even before you look at the numbers. For instance, Xcite™ will value ourselves at 6 times forward earnings assuming you throw the weight of your customers behind us. If they say no, you can say , “ok, half that!” And they will probably say yes.
Many companies that sell to a Google or Yahoo just use market comps. That’s fine also. But agree in advance what the comps are and what the multiples are. Because then you can always argue that your better than the last company that sold for X because of A, B, and C and that will allow you to negotiate for more.
5. During the negotiation: its not all about the number you get. Once you agree on a number, and their board agrees to buy you, they will close the deal.
6. After the Negotiation: this is the painful part. The deal is done. But it’s not done. You’re working for them. But you’re not yet working for them. At any moment the deal can unravel. Whatever you do, just shut up as much as possible and make sure the Xcite™ team is making progress every day. This has been the most painful part of my life in every deal. Make sure your due diligence package is all set in every possible way.
Also, most important, keep building your business after the deal is agreed upon but not closed. Keep building more and more strategic relationships. You essentially want to send the equivalent of a press release every week to the company buying you, showing how great you are doing and how you are talking with other companies about strategic deals.
7. Show up. Once you start talking to any company about any strategic whatever (but before the deal is agreed upon), then help them in anyway you can. Give them advice how to make their site better even if it involves introducing them to your competitors. Pitch them other business ideas you can do once you are on board. I’ve done all this and more in every acquisition I’ve been involved in.
8. Most Important: Don’t Fail. The ultimate key to selling is to stay in the game and keep trying.
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