Public Relations can be an Effective Tool in Attracting Investors or Buyers For a Company

May 5, 2016

venture-capital

Most companies are founded on the idea that somewhere down the road the owners and investors will hold a liquidity event that will financially reward all those that invested time and/or money in building a successful business.

This is no truer than in the tech industry, where brilliant minds have worked diligently for years, weathered the ups and downs in a competitive marketplace, persevered against all odds and were finally sold to a much larger company at a huge profit.

Unfortunately, many solid companies never get there, but few realize that one of the key factors contributing to this failure was they paid little or no attention to the power of public relation. They simply did not make the kind of investment in PR that could have made all the difference.

That’s the key component that is so often missing in these scenarios. Underinvesting in PR can spell doom for a company when it comes time to find a buyer. Furthermore, if you do succeed in finding a buyer without investing in good PR, chances are that you’re leaving a lot of money on the table, money you would have made had you been consistently promoting your company over the years.

How Investment Bankers and Smart Investors Spot an Opportunity

  • They keep track of industry news, seeking companies with a lot of potential
  • They speak to industry analysts on a regular basis
  • They frequently attend industry events, keeping their ear to the ground
  • They make a point of knowing all the major players in a given industry that may make a smart acquisition

What is clear is that, aside from the last point, potential buyers of your company are learning about you via your marketing efforts and good PR.

What is also clear is that if they don’t hear anything about you, if they are in the dark about your existence, what are the odds that they will be interested in acquiring you? Almost zero!

The truth of the matter is that if you want to be acquired down the road, invest in good PR.

In fact, you need to invest even heavier in PR as you approach the last 24 months before you package the company for sale.

The phone will ring and you’ll hear someone say, “We read about your company again today in an article featured in The Wall Street Journal. You are apparently getting quite a bit of attention and we were thinking that it might make sense for us to meet with you to discuss some possible strategic partnering ideas.”

If you play your hand right you can end up with a signed and notarized Letter of Intent to acquire your company for a very hefty price.

What would be even better is if you are talked about in the media in glowing terms and receive numerous calls like this one. There is no better way to get a high valuation on your company than having multiple companies bidding to buy yours. There’s no doubt that by hiring a business broker or investment banker you can be helpful, good PR can also be an effective driver for getting multiple offers.

It stands to reason. The more well known you are, the more interested people will be in wanting to buy you. By contrast, if your habit is to keep your head down maintaining a low profile, just focusing on pleasing your customers, nobody will be interested in your company or in making you an offer.

Public Relations has always been an effective way to build a brand, to build credibility. When there’s positive press about your company it acts as an endorsement of sorts, a good mention from a credible source that is going on the record saying your company is the real deal, not a “fly by night” operation. Other PR outlets, like showing up in reports by analysts, earning industry awards, or getting invited to speak on an industry panel also give the impression that you are a major player and all of this puts the name of your company front and center before potential acquirers.

The reason PR works is because you are not the one saying, “I’m the greatest!” – which is obviously self-serving; rather, it’s coming from a highly respected outsider who is saying, “This is really a great company,” which seems a lot more authentic.

This kind of credibility along with the visibility not only attracts customers; it also works to attract the attention of possible investors and companies that may be looking to acquire yours.

There is no doubt that good PR will gain you a higher price when your company sells. If you’ve managed to win a prestigious award or accolade, you can add another million or two to the sale price. Have you or your company been featured a number of times in major business media and/or trade publications? If so, you can feel confident adding several more million onto the price. When you build acclaim for your company, it adds to the value of your brand, and acquirers are willing to pay more for the added value.

There’s no better time than now to get started, so why wait? If you’re thinking about selling your company in the next couple of years, the time to hire a good public relations firm is now. If you have a tech company with a successful track record, we can help you cross the finish line. Please give us a call to set up an initial meeting to discuss how we can help you achieve the kind of sale you’ve only dreamed of.

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