Business owners and executives frequently ask us, "What should we be doing to prepare ourselves for sale someday?"
An old client and friend, Bill D., said it well. Even when not in a "sale mode," always be prepared for a sale because all those things are good for our business now (so why wait to do them?). He was exactly right. The initiatives and attributes that propel a government or defense contractor's growth and success are almost exactly the same as those necessary to be ready for a sale and to receive maximum demand and optimal terms and valuation.
These factors generally revolve around three key themes: business growth, risk (the word of the year in the financial services sector) and leveragability.
Business Performance/Growth
Strong organic growth for government services companies — top line and bottom line — is more difficult to come by in today's tighter budget climate. Customers have less money, seem always to be operating under continuing resolutions and, worst of all, typically struggle to understand the concept of best value, versus low cost, which they do understand.
In real estate it's all about location, location, location. For government services businesses, which need the right contracts, the right people and capabilities and the right customer relationships, success and growth are all about management, management, management.
It takes "A" players to attract "A" players, so having a stellar senior crew is key to building the right team. Fortunately, consolidation activity has increased the pool of seasoned senior executives who have been there, done that.
As the marketplace has become more competitive, differentiation has become more important, while bid and proposal costs have increased and margins have been squeezed. That differentiation can come in the form of intellectual property (formal or informal), key vehicles, clearances and/or key subject matter experts with capabilities that no other company can match. Having the right team in place will facilitate pulling the other differentiators together.
