Know-How Exchange : Branding

Let's begin with some clarification.

1. If you want to sell your company, then your target market is companies that need/want an acquisition in your business category. Not consumers. Consumers won't buy your company, and their knowledge of your company will not create demand among acquirers. You can get much better results for far less money using a B2B strategy.

2. Your company's existing relationships with partner companies is a very important asset. If you remove the veil of your white label and tell consumers that you are the real power behind their brands (undercut their image), you will very likely damage those relationships, potentially lowering the value of your company.

3. Focus on your financials. Nothing romances a potential buyer like a strong balance sheet and a history of profitability. Think of your financial statements as your product .... everything you do should enhance them. Sign up as many new white label customers as you can to add value to your business.

4. An acquiring company will be interested in putting their brand on your company. They will have to spend time and money to undo any branding you may do -- a negative for you at the negotiating table. Conversely, if it won't cost them a lot to re-brand your company, that's a very strong selling point and an advantage over another acquisition they might be considering. Make it easy to buy your company, not hard or expensive.

Having said that, here are some next steps:

1. Focus directly on what you really need: A buyer. Your prime target market should be successful companies that are technology driven and understand the white label business. GoDaddy (which runs a huge white label hosting service) and Travelocity (which runs a big white label travel service) are two such examples.

2. Secondly, target other businesses that are capable of absorbing a white label business: B2B marketers in categories you may not have considered such as big-box office supply chains, commercial insurers, computer repair networks, etc. Alternately, consider some of your existing retail partners; if one or more have deep pockets, they should also go on your list of targeted potential buyers.

3. While many consultants may be able to help you with strategy, a good, solid PR specialist -- one who already has connections in the business media, and understands both the tech arena and the mergers-and-acquisitions point of view -- can be your mainstay. They can guide you through the process of elevating awareness of your company -- a great investment for a company in your position. Get the best person you can afford.

4. As to your question, you're probably not going to find the perfect case study blue-print on a white label acquisition that suits your company, because every company is different. Furthermore, those who acquire companies don't do it for reasons you might find in such a case study; they buy companies to satisfy their own needs. You can't create acquirers; but you can create the best possible product (a valuable company). Again, rely on a seasoned public relations consultant who has been down this path before as your guide to positioning yourself for attention.

5. To solve your problem of retaining white label partners (by enhancing their consumers' views of your service), get busy winning awards, accolades, and top ratings for your security service; then create emblems or medallions that partners can install on their walls and websites. That way, partners can say promotionally, "We offer the #1 rated Security Whatever on the planet," or "Our Whatever Security Thing: Winner of the Golden Padlock, three years running," etc. They'll have little interest in switching to another service if they've helped to position yours/theirs as great.

Also, find ways to encourage your partners to feel an emotional investment with your company, not just a financial one. Give them awards, write glowing recommendations on their corporate blogs, appoint their owners to your company's advisory board(s) for a specific topic(s), create a joint task force to work on an industry problem, sponsor the owner's son's soccer team, etc. Again, a good PR pro will now how to lead you in reinforcing loyalty among your partners.

Bottomline, it actually comes back to basic marketing:
-- Identify your target audience for acquisition (companies that would potentially be interested in acquiring a business in the security space).
-- Learn their needs. Survey, read, talk to consultants in the same fields as your target audience.
-- Position your company as a solution to those needs. A public relations strategy coupled with the ability to generate external chatter about your company, is your best tactic in this regard.
-- Reinforce your current assets and avoid saddling your potential acquirer with a lot of additional effort or expense.

Remind your colleagues that acquisition and ongoing business are two entirely separate issues with separate solutions. The end user of acquisition is a business with financial goals and shareholders to satisfy; the end user of the security service is an individual making a consumer purchase. Apples, oranges.

Hope some of this will help you develop a successful direction for your company. You're so smart to get on this now, a few years before you need the final result. Best of luck to you.

Wow! Peg has hit a home run in her advice to you.

That said, we have had a lot of experience branding ingredient products/services ... all of it quite successful, and some of it very fast, but with substantial investment. In every case, our clients have preempted partner brands.

Examples: Stainmaster [Certified] Carpeting (where DuPont only sold the fiber to carpet mills); Intel Inside (where Intel only made the CPUs, not the computers); Qualofill pillows (where the actual fill is just an ingredient, and nobody knows or cares who the manufacturer is); etc.

The difference, of course, is that each of those examples was for the purpose of influencing consumer behavior and generating high awareness of, and value for, the ingredient. Those are not your problems. So ... listen to Peg.

The intelligently formulated question elicited an equally intelligent response, a "best practices" benchmark for this forum. I just want to add two footnotes to Peg's great answer. The first is that everyone knows about building a network of relationships with customers. But people tend to ignore doing that with the companies out there that focus on BUYING other companies, such as private equity firms.

Consider doing some homework on what kind of private equity firms could be a good fit for you. Start getting to know some of their partners. Find out what really appeals to them, and to their clients.

For instance, could having a "China card," or a "software for security robots card" be what adds "jazz and sizzle" to the steak of the good financials for this kind of buyer? Knowing that can play a role in deciding what opportunities to pursue in the course of "packaging yourself" for a future buy-out.

Focus on firms that a) are as close as possible to you and b) that have done acquistions in your industry. To find them:

1. - Pratt's Guide of Thomson Reuters lists 20,000 VC, buyout and mezzanine firms. It is the standard reference, quite likely through your public libray (in addition to other relevant databases).

2. - Prequin Alternative Assets is an interesting newcomer with offices in London, New York and Singapore. Mark O'Hare and Nick Arnott founded the firm, which is owned by its staff, in 2002. It offers profiles on 3,600 VCs, 5,300 private equity firms and 60 sovereign wealth groups. Its services are pricy, so do some due diligence before purchasing.

The second footnote is about negotiating. Selling your firm could well be one of the largest and most significant negotiations of your professional life. Yet a suprising number of people walk into such sessions with little or no formal training and inadequate preparation. Take a look at the extensive literature out there on negotiation and see if some of those books make sense for you to read.

Reading does not hurt, but practice is what counts. Take a look at the top end negotiating seminars offered at, among others, Harvard Business School and Wharton - pricy, but they do a good job.

At the very least, be sure you video tape your team doing repeated scenarios well before the real negotiations begin.

Regards,
JH