Many startup owners are eager to sell their fledgling new business at very high price to major corporate entities. Many start-ups are build around a highly innovative patented idea that can be transformed into useful product. Inventors often see corporate acquisitions as the final goal that can fetch them millions of dollars within a few years. They simply don’t have the managerial skill and manufacturing capacity to sell their products to the global market. Many inventors should realize that they are not sellers, businesspeople and marketers. Even with these limitations, inventors are still able to make their new business as an excellent acquisition target in the business circle. It’s a method that can be implemented to attract a global manufacturing corporate. Here are things that they can do:
1. Remove excess costs and always consolidate:
Fast-growing entrants attract investors, especially when the industry matures and the overall growth is sometimes slow. Huge manufacturers often begin to exceed demands and their overall profts shrink. Start-ups can grow above the average industrial growth by removing excess costs. Underperforming assets can be shut down after each consolidation session. A highly efficietly and trimmed down startup is an excellent proposition for any bloated manufacturing corporate entity that seeks for a fresh idea in the market. Startup owenrs should demonstrate higher growth at least in the local scale and they may become the target for acquisition. In fact, startups don’t need to be highly profitable, because corporate investors simply seek to get new technology to make themselves more competitive in the market.
2. Offer compelling new products:
Startups should be about innovation and providing something entirely unique in a mature marketplace. Startups that have innovative product will likely grab sizable market share and fill a new niche. Startups should prove that buyers actually purchase the products and can benefit from them, despite significant limitations in production capacity and marketing resources. Corporate investors with much bigger sales and marketing networks will consider whether they can gain much more by acquiring the startup and its product. Startups should ensure that their products are truly unique and high beneficial for consumer.
3. Acquire talents and patents:
A good startup is backed by an impressive idea or talent. This is why startups are highly interesting and it’s much cheaper for major manufacturer to acquire startups than developing a competing technology. Inventors could also aim for “acqui-hiring”, instead of normal acquisition. Their talent and experience can be worth much more than their actual weight in gold. Other than getting assets, inventors are needed to relinquish their intellectual capabilities and hired for a period of time. They can become key employees for the duration of the project. In order to strengthen their positions, startups should have multiple patents that are relevant in the industry. Inventors can obtain much more by becoming a viable acqui-hire target.
4. Achieve acceptable business development:
Business development can be achieved with common sense. Google and Apple have acquired multiple start-ups and absorbed the technology for their flagship products and services. They have done this extremely well, by choosing the right startups before others can see the potential. Google implements the “Toothbrush Test” when considering to acquire a startup. It means that the technology should be used by customers at least twice a day. Obviously, the technology should be unique enough, but still useful across a diverse demographic.
5. Look for underutilized assets and use them to improve company performance:
Startups are known for their limited capacity and any underutilized asset is necessary to improve their growth. Startup needs to maintain healthy cash flow. If it can’t sustain large volume of sales, reduction of costs is needed to ensure acceptable profitability. Inventors need to be sensible and determine whether they can sustain employees during poor sales. Debt can be deadly for startups and they need to manage their finance, while having the capacity to withstand worst case scenarios.
By considering these factors, inventors have dramatically higher chance of getting acquisition offers from major inventors and corporate manufacturers.