Monday, April 12, 2021
Sunday, April 11, 2021
[Editor's Note: The decision to become an extraordinary company is not coincidence or happenstance. Rather it is a conscious choice. Shouldn't you be great at what you do? Shouldn't you decide to become the company your customers can't live without? Some companies have remained defensive, chastened by the shock of the early pandemic months. I thought this article that I first published several years ago was appropriate for these times. -dpm]
Author and speaker Joe Calloway opens many of his presentations with a story from the movie Apollo 13: "The movie opens with a gathering of astronauts to watch Neal Armstrong who is about to become the first human being to walk on the moon. As we hear Armstrong's immortal words, 'One small step for man; one giant leap for mankind,' the mood becomes quiet, even reverential. ...Shortly after the broadcast, the party breaks up and everyone goes their separate ways, Jim Lovell, who is played by Tom Hanks, is alone with his wife, Marilyn in their backyard. Looking up at the moon, Lovell says, 'From now on, we live in a world where man has walked on the moon. It's not a miracle. We just decided to go."
Calloway makes the point that the first step that great companies make is the deliberate decision to pursue greatness. Many organizations talk about change. Sometimes companies will orchestrate management retreats, spending two or three days at some resort developing great ideas in a sea of flip chart paper and white boards. Six months later, everyone wonders, "What happened to those great ideas we had."
Strategic Planning without a "Decision to GO" is a waste of time
Decide to go... or go home. Strategic planning without a "decision to go" is a waste of time. You might think it peculiar that a company like ours would make such a statement. After all, The Mead Consulting Group helps companies develop and execute strategy. But, after more than 35 years helping companies, we have learned that it is the commitment to ACTION that determines success. "Deciding to go" is the biggest differentiator among companies.
What many people don't know (or likely are too young to remember) is that when President John F. Kennedy made the statement in May 1961 that the U.S. would put a man on the moon by the end of the decade, it was simply not another political speech. He rallied support in all sectors of government and the country. He helped us all see that this was a major commitment that was worthy of our time, resources, and commitment. He helped us "decide to go." You might say that President Kennedy created what Jim Collins ("Good to Great") calls a BHAG - a Big Hairy Audacious Goal.
Processes Institutionalize commitment
Motivating the populace was just the start. We needed processes and plans to achieve such a feat. After all, at the time of Kennedy's statement, the U.S. space program had not even managed to orbit the earth. To speak of going to the moon struck some as an impossible task. It would have been an impossible task if significant changes were not put in place. NASA and the other key organizations worked together to put organizations, plans, people, and processes in place.
Research shows that not a day went by that at President Kennedy did not inquire about some facet of this commitment - notes to the Vice President about funding from Congress, encouraging commitment to math and science education, speeches to keep the issue in front of the American people - making us all feel proud to play a part in this journey.
Along the way, it became OUR goal. It was the processes and daily commitment of many people - at all levels - that made it work. Kennedy was alive for only the first 1000 days of the journey. During that time he helped us make this BHAG ours. Then we took it the rest of the way.
Become the best at what you do
Organizations define themselves - set their own limits. Leadership helps paint the picture for greatness. It is too easy for small and mid-size companies to say that "we're only a small company" or "we sell undifferentiated, unglamorous products." With that attitude, why bother getting out of bed in the morning. A mentor of mine once told me, "There are no boring jobs, only boring people." What he meant was that people need to be inspired. If you have an undifferentiated product or service, whose fault is that? Do something to transform the customer experience.
Develop a big goal. Then go make it happen. The successful companies are focused on the daily details to accomplish that big goal. Everyone wants to be part of something great.
Become the best at what you do - whatever it is. Make the Decision to Go!
Saturday, February 27, 2021
Thursday, February 11, 2021
What is a lower middle market company?
Lower middle market is defined nationally as transactions between $10M and $250M in enterprise value.
When is a good time to sell?
CEOs and business owners routinely ask the question, When is the best time for me to sell? Is now a good time or should I wait? Truthfully, many of the folks that address that question (investment bankers, private equity professionals, financing sources) have a vested interest in having companies go to market. So, business owners can be skeptical when reading optimistic projections.
The Mead Consulting Group has advised business owners for years that there are a number of factors to consider when evaluating if it is a good time to sell a business. The most important is to make sure your company is prepared, and to not wait for the "absolute best time" to sell, but to sell when the market is good. There are lots of examples of companies that have regretted not going to market in 2006-2007 because they thought the market for their company would be better in 2009 or 2010, or got caught in the early “Covid squeeze” when the stock market plummeted in March 2020.
There are a number of factors that suggest that 2021 could be a terrific time for some lower middle market company owners to sell.
1. Company results have rebounded or stabilized. Many lower middle market companies have rebounded or at least stabilized from the early Covid downturn. Even if revenue growth in some sectors is still very moderate, many companies have done an excellent job of managing expenses and increasing cash flow. Demand in many industries has rebounded nicely.
2. Valuations are high. With stock market at record levels, the prices (multiples of EBIDA) being paid for good companies are at high levels.
3. Potential Tax Changes. With changes in Washington, there may be an appetite for raising taxes to offset the cost of the Pandemic, and the economic stimulus packages.
4. Interest rates are still historically low. This is important since the buyer of your business need to borrow for the transaction.
5. Private equity firms have plenty of dry powder and fewer distractions from older investments. Private equity firms have raised record amounts of investment capital. With lots of capital to invest, they need to put that capital to work by buying companies. At this time of year, they can focus most of their attention on looking for new opportunities.
6. Private Equity has an increased focus on lower middle market transactions. There are many new private equity firms and family offices that specifically focus on the lower middle market.
7. Strategic buyers have lots of cash. Strategic buyers have been accumulating cash in record amounts.
8. Strategic buyers need to find new ways to grow. Sources of organic (internal) revenue growth have been difficult for many strategics. They are under pressure to acquire companies that add new products, new customers, new geographies, and new capabilities.
9. There are still more buyers than sellers in the market. The number of baby boomer business owners who are reaching retirement age is increasing daily. In 2021 baby boomers range in age from 57-75 years old. There comes a time when these business owners need to sell and there may well be a glut of businesses on the market. Surprisingly, this has not happened yet.
Are you and your company ready to go to market?
Most business owners who have executed a successful sale of their business will tell you the most important thing is: BE PREPARED.
Selling a business is very different than operating a business. As a business owner you know your industry, your product or service, your customers and your markets. Most business owners will only sell a business once in their lifetimes - and it can be by far the most important financial transaction of their lifetime.
If you would like to perform an assessment of your company's readiness to maximize value in a sales or recapitalization transaction, contact me today.
Thursday, January 28, 2021
Traits for Happiness
Seven Gifts from people with the happiest lives
This list is from Hugh Hewitt's book, "The Happiest Life". As we move into the new year, I thought this list was very appropriate, especially given the trying year in 2020. It was compiled from interviews of people across all ages, ethnic groups, and circumstances. I hope you find it inspiring as we enter this new year. . If you haven't read Hewitt's book, it's a quick read and well worth your time. - dpm]
Best wishes for a happy, healthy, and prosperous new year!
(Excerpt from "The Happiest Life" by Hugh Hewitt)