So you have a media firm based in the Middle East and eventually want to sell parts or all of it to interested buyers. How should you run your business to suit a great acquirer?
I had the pleasure of sitting and chatting with Yousef Tuqan Tuqan, CEO of Flip Media, a firm recently acquired by Publicis Groupe, at their lovely headquarter at Dubai Media City.
These are the top 7 lessons you can learn from their acquisition experience:
1. Engage with an institutional investor early
In 2006 Flip Media sold a significant equity stake to HSBC Private Equity Middle East - just 3-4 years after their inception. While it may sound too early in the life of a firm, engaging with an institutional investor will teach you great lessons in corporate governance, due diligence, and audit requirements - and provide you with the discipline required to even run your day-to-day operations.
2. Don’t hide investors from your employees
Many companies deal with their investors as some ghosts that need to be invisible from the employees! Having your employees involved in some general meetings with your investors, as Flip Media was doing regularly, will keep your employees motivated and on-track with your goals.
3. Surround yourself with great advisors
Having fantastic advisors will help you more than you think. Flip Media used to have technical, financial and strategic advisors listed as its advisory board.
4. Utilize M&A advisors
While your institutional investor will help you in a great way, an M&A expert will certainly be helpful in advising you on the most suitable acquirer in your specific industry. Flip Media used the services of M&A advisory firm Results International for their exit.
5. Exit for the right reasons
You are not selling a stake at your company to run away or just become rich. Make sure you are selling for the right reasons and you will find the right buyer. Flip’s co-founders viewed the acquisition as a natural step in Flip’s long-term evolution, not an end-goal.
6. Focus, not expand, your product line before selling
Your common sense might suggest that an acquirer would appreciate you being active in 10 different product lines; and that may urge you to launch new product line hastily just to show how big you are! But in reality you are better off with a couple of perfect products and services. Flip had actually exited from some of their products, long before being acquired. (Like Brand Central, which was a marketplace for advertisers and publishers in the Middle East)
7. Focus, not expand, your regional bases before selling
For the same reasons, a buyer appreciates regional focus. For example Flip used to have offices in Bahrain and Qatar, but the strategy of serving them from their base in Dubai turned out to be more successful than having offices in those countries.
Of course these are the items that we understand to be the top lessons from the Flip Media story, not necessarily how Flip managers would summarize as top lessons. But after having seen hundreds of such exits for the past five years, we can assure you that you will find your acquisition process much easier if you move along the above lines.