If you have been working for hours, sacrificing time with family and friends to build your business. Then making profits by selling the venture is a top priority.
Alexei Orlov, Founder and CEO of MTM (Moments that Matter) has often argued that selling a business for profit isn’t the only reason entrepreneurs choose to sell their companies. Other associated benefits include:
- The sale is a retirement plan after countless sleepless nights and hard work.
- The seller decides to sell the business to get peace of mind or spend more quality time doing other things.
- Getting freedom from running day-to-day operations which can be emotionally draining at times (depending on how much control was given up when starting).
Alexei Orlov believes that when making the transaction, the buyers and sellers share the same ideals. The buyer in the future would want to recoup their investment and make a substantial profit if they ever decide to sell the business. However, finding this convergence of ideals is a rarity.
The Winner Takes All Approach Should be Discouraged
The reality is that nearly half the time, these deals end with one party feeling dissatisfied. The aggrieved party suffers heavily from what is described as buyer’s remorse. I realized that this happens as most people have reduced this into a business competition. However, such simplistic rationalization should be left to the pitch and should never find itself on a negotiating table.
Acquisitions don’t need to be ruthless. The seller doesn’t need to hoodwink the buyer into buying a dead company. Equally, when buying the company, the buyer shouldn’t be quick to impose their ethos after the acquisition of the company. For example, it is inevitable for some employees to be declared redundant due to the acquisition. However, the buyer shouldn’t do this aggressively to whittle down the culture of the company.
Making a Difference Through MTM Choice
Luckily, Alexei Orlov and his team at MTM have developed tips that help all parties ensure that the acquisition will be mutually beneficial. The starting point is a simple acknowledgment that there is a wide chasm between buyers and sellers in an acquisition.
Alexei Orlov, who founded MTM Choice in 2017, five years ago. has committed to ensuring that acquisitions are successfully carried out through the company without either party feeling shortchanged. The company has been able to excel by using two tenets:
1. Understanding the Company
When involved in any business acquisition, Orlov has noted successful acquisition is not just about the numbers. There is so much more to a company than what’s on paper. Understanding their journey, both the good times and the bad will give you any buyer insight into why these companies are successful or otherwise.
Understanding this information can make the buyer’s decisions stronger in terms of acquisitions because it gives them clues as to how best to invest their capital. It would be best if a buyer could stick to buying those companies that fit their value system and ideological way of thinking (and vice versa).
Alexei will admit that sellers always make attractive portfolios. However, going beyond this well-crafted documentation is key to the future sustainability of the acquired business. For context, there should be scrutiny on the clients. Ask questions like, which of your bigger clients have parted ways with the company recently, and why did they leave? If there are consistent clients, what is the winning formula? Will those standards be maintained?
Egalitarian principles also drive MTM. With this in mind, Alexei Orlov has enhanced MTM credibility by ensuring that all parties must come with clean hands when any acquisition deal is being negotiated. In a nutshell, the parties must table every transaction detail to avoid possible litigation, citing misrepresentations and active concealment of facts.
Orlov is motivated by the egalitarian doctrine to start the equality movement in the business acquisition realm. As the principle demands that everyone is treated fairly (equally), that is what MTM practices.
He views the transaction as a seller giving out a company that has taken him blood and sweat to build. Therefore, he would be handing over an entity that will continue being a going concern to the new owner(s). In contrast, the buyer pays a proportional amount to offset the efforts of the seller.
In implementing this principle, the parties treat each other as partners in common (the seller gets their payday while the buyer acquires the business entity), not business adversaries.
The egalitarian approach isn’t new. It has been successfully implemented by several states, including Sweden, whose products can be found worldwide. Their products are found in various sectors like the car, entertainment, healthcare, among other sectors. Some popular brands from Sweden include Volvo, Ikea, AstraZeneca (yes, the Covid-19 manufacturer is from Sweden!), Skype and Spotify.
Alexei Orlov was inspired by Swedish financial journalist Joakim Malmberg’s simple explanation of the doctrine as “A generous welfare state makes people more comfortable at taking risks.” This means equality is a tool that promotes entrepreneurship rather than stifling it.
Applying this principle, Orlov is a proponent of each party winning instead of capitalism or pitch mentality where a winner takes it all and parties are held to their bargain. In applying equality, all parties will have access to all information that goes beyond the balance sheet.
For successful acquisitions to be a reality, understanding and equality tenets should converge. At MTM, Alexei Orlov and his team take enormous pride in helping with the continuity of business brands. To find out how MTM can help, reach out to Alexei Orlov and his team from their website, www.thisismtm.com.