Often, the best way for monetizing your brand value is to sell your brand. What the value is, when to sell, and to whom are all questions that beg for answers; but being prepared is the essential ingredient to gaining the greatest value for your years of hard work.
To a large extent, your brand value is based on your chart of accounts. Protecting your customer relationships key to getting the most out of your brand equity. The size of your chart of accounts and the likelihood of continued sales are big factors in the mind of your acquirer. What is the best way to protect this valuable asset during the negotiation and acquisition process?
Once you have an interested party, your brand equity can be severely diminished by last minute factors, such as how long the deal takes to negotiate and close, and who represents your interests. Successful brand builders who maximize their brand value are prepared for a swift close and are represented by an agent or broker who has a financial incentive to achieve the desired price and close quickly.
The less time it takes to close the deal the better. Years of equity building can be lost in hours because the longer the deal takes to close, the more likelihood that the deal will spill out into the marketplace. Confidentiality is key, or you risk losing employees, such as your key salespeople who control the very relationships you are selling. If the word on the streets is that your company is for sale, you may have to give your buyers a discount to keep them. They know the value of their continued business to you and your acquirer. And some may even cease buying and wait to see what the new owner will do with the price and the quality. Some suppliers may tighten up on their terms because of the uncertainty. The more time that goes by, the more your brand value can be hurt.
The best time to get ready to sell your brand is not when you realize that you have built yourself a job and you now want out. It’s not when you realize that your kids are not going to take over the business, and it’s not even when Mr. Big comes knocking at your door. In fact, the ideal time to begin planning for the acquisition of your company is on the same day you start your business.
If you intend to sell your business, do your acquirer’s due diligence for him. In other words, be ready to sell at any moment. This means identifying all the documents the acquirer wants to see at closing, and set your business up from the beginning so that those documents are accessible, complete, and in a safe place.
The obvious documents required are trademarks, copyrights, and other intellectual property, as well as contracts, sales and growth reports, compliance, licensing, leases, purchase agreements, employment records, and a host of others. But due diligence also includes some documents that may surprise you and leave you scrambling at the last minute, costing you precious time and brand value.
For example, in addition to the originals, do you have releases from every artist and copywriter whose work is used in your logos, slogans, and marketing materials? Do you have a list of disclaimers and disclosures? Don’t be in a reactive mode to your acquirer’s due diligence process by being caught scrambling at the last minute to negotiate these releases or trying to remember everything you have to disclose. Have everything prepared in advance to prevent the due diligence process from stretching into months.
What’s the answer? Be ready from day one! Organize your business so you regularly identify, collect, and safeguard essential documents. In other words, start with your end goal in mind!
Who Are We.
Having built and sold a bestselling national brand, we appreciate the value of brands and everything it takes to make them successful. Companies are valued by their brand equity. Achieving and maximizing brand equity requires tremendous respect for all your customers, from your wholesaler to your end user.
Starting in our laundry room with no money and no knowledge of the industry, we built the famous Barefoot Wine brand. We learned a lot they don’t teach in school and much of it the hard way. Although our success was in consumer products, our real world experience will be helpful to anyone looking for information and advice about brands.
We have written the New York Times Bestselling Business Book, The Barefoot Spirit: How Hardship, Hustle and Heart Built America’s #1 Wine Brand, which chronicles the history of the famous brand from its inception through its acquisition. Our book is now required reading in schools of entrepreneurship across the country. We hope this book will provide inspiration and encouragement for all those contemplating starting a brand or wanting to improve their existing brand.
Michael Houlihan and Bonnie Harvey
-Barefoot Wine Founders