Modern middle-market executives are a talented and determined group of individuals. They know their businesses well and many of them (especially Baby Boomers) have been experts in their industry for decades. However, an unconventional intruder that even the most seasoned professionals find difficult to control has found its way into every industry – digital.
The digital invasion is happening from both an operational and financial standpoint. Not only are your customers and business ecosystems (entertainment, manufacturing, transportation, etc.) interacting with each other more than ever but so are investors. To succeed in this hyper-connected world, you’ll need to extend your capabilities and strategies beyond the traditional.
Here are the two questions that you need to answer to succeed:
1. How should your middle-market company evolve to manage the demands of a digital world?
As with all things, the first step is to accept it. Digital is here. Next-generation technologies are essential in every industry. Social media is ever-present, and your customers demand that you interact with them. Once you make the mental choice to accept digital innovation into your business, opportunities will abound. Consider one of these three approaches:
1. Be aggressive and try to become a digital disrupter on your own.
2. Stay on top of the latest developments and jump onboard without falling behind.
3. Delay as long as possible and then act when you are 100 percent sure that the new technology will be a worthy investment, but risk being behind the digital curve.
You can then harness the capabilities that are inherent in digital operations by taking proactive measures. Consider how you can become more efficient and more directly address end-user desires. Also, explore your ability to gain access to adjacent markets (we see high-profile examples of this all the time from the guy down the street being your Lyft driver, to Amazon moving into brick-and-mortar grocery, to Microsoft buying a social network in LinkedIn).
One of the biggest payoffs from your investment in new digital systems will be the availability of data, which should be collected and analyzed to make well-informed business decisions. There is a high chance that you will gain a keen insight into how your business runs in ways you’d never seen before. Be strategic in how you approach the data you gather and use it to keep innovating.
2. How is the digitization of the marketplace affecting your ability to find acquisitions, investors, lenders, and buyers?
Beyond integrating digital innovations to improve the day-to-day operations of your business is the evolution of the private capital markets.
The M&A marketplace before technology was not as robust. Not only was it much harder to find opportunities, it was harder to get deals done (i.e. a deal room was actually a room with all of the documents in it and people would spend days and weeks in there with the data). Now we operate in a “virtual data room” and people are not coming onsite to gather data.
Marketplaces are still the same. Anyone can place an opportunity on a marketplace and anyone can show up as a buyer and review the opportunities via channels like Bizbuysell, Mergerplace, Bizquest, and Axial Market. There are also databases like CapitalIQ that help find companies in a specific industry that are owned by private equity or corporations that may be selling corporate cast-offs. If you and your company are acquisitive, you should consider being active on as many seller sites as possible while listing the criteria required for your prospective purchase.
Trusting that things will continue to go as they have been is dangerous in the modern business environment. Everything from customer interaction to how you find investors is changing on a month-to-month basis. Consider the two questions we’ve presented here and how your capabilities and strategies need to evolve for your business to succeed.
If you’re considering making an acquisition, it’s in your best interest to get started as early as possible. Here at Symmetrical, we are committed to helping your company identify and secure the best deal it can and integrating as efficiently as possible. Contact us today to get started.