Selling Your Catalog: Prepare for the End Game
Sale, merger, IPO? It’s important to know, from the very inception of your business, how you will exit from it.
The end game is a fascinating concept. It is philosophically universal, therefore having definition and meaning relative to life and living, religion, art, war, sports, investments—and ownership of a catalog business.
When one thinks of the term “end game,” the two words “end” and “game” should be considered. First, it’s the end of a process, often the sale of a business or the harvest of wealth after a long period of creating and increasing value.
Second, it’s a game, that is, a strategic contest producing either a winner or a loser. By definition, then, the end game in a catalog business is a strategic process whereby value is harvested and maximum wealth is won as a result of precise strategic planning.
The achievement of a successful end game is easily described; however, the preparation and execution of the steps leading to the successful strategic achievement of the end game are exceedingly difficult and subject to significant internal and external influences.
After years of advising owners and CEOs about their end-game objectives, it’s clear to me that few owners actually have defined the end game for themselves. When the question, “What is your end game?” is asked and the answer is, “Sell the business,” little thought has gone into the objective. The owner is expressing a hope, not a plan.
Rarely, an owner will say something such as: “To improve earnings by 25 percent during each of the next three years in order to create a multiple of eight times EBITDA [earnings before interest, taxes, depreciation and amortization] instead of the present five times EBITDA, and to do that using disciplined segmentations of customer and prospect mailings through advanced RFM tactics, and to focus on universe penetration in four major SIC segments to sell the company to one of three strong strategic buyer candidates.”