Marketing Your B2B Business (For M&A, Not Product Sales)

November 15, 2023

Marketing is all about promoting your company’s products and services, right?

No, not all.

Generating sales leads is primordial because without revenues the company will not survive. But there’s a bigger role for marketing to play than just future revenue creation.

Last week, I ventured into the high-altitude world of mergers and acquisitions, spending a day at the Dealmakers conference in Houston.

It’s a gathering of investors, bankers, lawyers, advisors, and business owners to share ideas and make connections in the world of lower middle market transactions.

“Lower middle market” is a nebulous term that refers to the “lower end of the economy’s middle market segment”. Helpful.

According to Investopedia, middle market firms enjoy annual revenues “roughly in the range of $10 million to $1 billion, depending on the industry they operate in.”

So, LMM translates “roughly” to $10-50 million revenue businesses—either privately held or owned by venture capital investors—that are candidates for growth capital investment or a strategic buy-out.

Most of my clients are one or two sizes smaller—and financial stages earlier—than this, but I wanted to learn what’s happening higher up the ladder, so to speak, as a gauge for what might lie ahead for my clients.

I was specifically on the lookout for ways that marketing can play a role in positioning your company as an attractive acquisition target at a premium valuation.

Although I left disappointed by a lack of color commentary on today’s complicated market situation, I was able to hoover up some insightful tidbits on creating value in anticipation of a sale, the importance of people and culture, establishing a positive story around a liquidity event, and how everything ties back to your vision for the future.

As a B2B marketer, these aren’t your typical, everyday concerns. Follower counts and social posting schedules won’t solve them.

However, they should play a part in your marketing strategy.

Let me explain.


Showcasing Value: Profitability Over Profits

When I speak with leaders about the value of their business, they usually point to some market-set multiple of the profit their business has made over the last twelve months.

While that’s certainly a valid way of calculating enterprise value, it’s a retrospective measure that’s only true today.

Whoever is hoping to purchase your business—a term I’ll use throughout this post to mean both outright acquisition and private equity investment—wants to know both what they should pay for it today and what they might sell it for at some point in the future.

This requires communicating—and maximizing—your company’s profitability.

Profitability is the company’s ability to make money.

It’s what led to the profits you’ve made over the last twelve months and it’s what will allow you to make profits in the future.

Investors want to know that you will continue to make profits, irrespective of market and macroeconomic conditions.

When times are good, your business should be making hay.

When times are tough, your business should still be profitable.

It’s important to communicate that not only is your business is profitable but that you’re doing things to improve its profitability overtime.


Implementing Structural Change: Marketing as a Multiplier

Investors want to feel a sense of urgency; a drive to accelerate results and cash flow.

This often requires structural improvements and changes to your business model, rather than incremental operational tweaks.

Early-stage companies—especially family run businesses—under-utilize technology and tend to accept a level of mediocrity in their business processes.

This can be low-hanging fruit for an acquirer, but it can also diminish the company’s value in their calculations.

I’m a vocal critic of “random acts of marketing” and a relentless advocate for strategic B2B marketing

I was simultaneously delighted and disappointed to hear an M&A advisor recount how many “random acts of marketing” he sees LMM companies making.

Delighted, because I’m a vocal critic of “random acts of marketing” and a relentless advocate for strategic B2B marketing.

Disappointed, because these are successful businesses that generate substantial cash flow; why on earth is their marketing still so immature?

There’s no excuse for a potential acquirer who’s looking at a business generating $5‑50 million annual revenue to see unstructured, non-strategic marketing.

Said another way: implementing an effective B2B marketing strategy is, sadly, one way to differentiate your business in investors’ eyes and potentially increase its value.

On a related note, I heard two investors stress the importance of “dollarizing” your company’s value propositions.

This means you must understand the monetary value you create for your customers.

If your value prop speaks about “saving them time”, how much is that time worth to them?

If you claim to “increase efficiency”, what’s the dollar impact of that improvement?

Footnote: once you can “dollarize” your value propositions, it’s a lot easier to justify raising prices, the hot ticket to growing your bottom line.


Understand the talent you have and fill any gaps while sustaining your culture

Conserving Culture: People Before Process

The next thread I saw running through multiple panel discussions was the importance of hiring and retaining the right people.

This is as true for your marketing team as it is for any other aspect of your business.

As one panelist put it, “You need to understand the talent you have and the gaps; then fill the gaps while sustaining your culture.”

From a marketing perspective, it’s critical to understand the wider team’s ability to contribute and their willingness to change.

Digital marketing—and content marketing, in particular—is foreign to many tenured business teams who grew up on a steady diet of trade shows, printed collateral, and milk runs.

Tap into fractional marketing leadership and freelance (or agency) resources whenever possible

Marketing is seldom one of the company’s core competencies.

While your headcount is less than 300 employees, M&A advisors recommend an outsourcing playbook for non-core processes, including HR (for which you should engage a PEO) and marketing.

Tap into fractional marketing leadership and freelance (or agency) resources whenever possible.

When you do decide to hire a marketing professional, remember that pedigree is no guarantee of fit.

Bringing in someone that has “been there, done that” makes sense; they should know what needs to be implemented and how to replicate the success they’ve seen at more established companies. But sometimes, things just don’t gel.

If the situation arises, respond quickly to the misfire. Neither the employee nor the business benefits from letting them continue.


Setting the Scene: Positive Vibes

Knowing that a transaction is in the works can set everyone’s nerves jangling.

This is true from the CEO to the front lines. Acquisitions spell uncertainty and that dreaded word: synergies (a.k.a. layoffs).

While layoffs aren’t an inevitable consequence of every merger or acquisition, there’s a good chance that duplication of roles will result in employee departures—although they could just as easily come from the acquiring business as the one being acquired.

It’s important to remind leaders, investors, employees, and other stakeholders that being acquired is a positive step in your company’s growth journey (unless it’s being sold to stave off bankruptcy, of course).

If your business is being acquired, it’s because the team is doing something very well, so the acquirer is likely to want to adapt and incorporate that into their existing business.

There should be ongoing discussion—and marketing communication—about where the business is going, how it’s growing, what it is doing really well, and how that journey aligns with stakeholders’ objectives.

Since businesses with institutional investors on their cap table are always for sale, regularly reminding your audience that the business is on a journey helps to reduce the shock and strife when that journey includes a change in control.

Which brings me to the subject of vision…


Selling the Story: Going Beyond Solutions

Everyone on your team needs to believe in the company vision, if the business is going to perform.

So, you must remind them regularly what that vision is and why it’s important.

And don’t think too narrowly about “team”; in this context, your team includes founders, leaders, employees, investors, customers, and any other stakeholders with a vested interest in seeing your business succeed.

Investors in particular must believe in the company’s vision as passionately as the founders and management

Investors in particular must believe in the company’s vision as passionately as the founders and management, because bad times will happen but need not be the end of the journey.

As a marketing leader, you must include this reiteration of purpose, mission, and vision in your content marketing strategy.

In fact, almost everything you publish should be tied back to those foundations in some way.

Reminding people why they joined your company’s journey helps them to see its present circumstances as a point along the way and a leg in that journey—even when that leg involves the hiatus and uncertainty of being acquired.


The Bottom Line

Marketing plays a critical role in helping your company hit its corporate objectives.

And, while a big part of that role involves attracting and engaging prospective customers and turning them into revenue generating opportunities, there’s another layer of marketing that supports enterprise value creation.

It’s important to communicate about the company’s profitability, which includes its ability to continue making profits, irrespective of market and macroeconomic conditions.

It’s critical to implement an effective marketing strategy, which will differentiate your business in investors’ eyes from those that persist with random acts of marketing, potentially increasing its enterprise value.

It’s important to “dollarize” your company’s value propositions by understanding and communicating the monetary value you create for your customers.

You must understand your team’s ability to contribute to marketing and their willingness to change as you implement digital marketing strategies. Tap into fractional marketing leadership and freelance (or agency) resources whenever possible.

Your marketing must include reminders that being acquired is a positive step in the company’s growth journey—an event that’s occurs because the team is doing something very well.

You should communicate where the business is going, how it’s growing, what it is doing well, and how that journey aligns with stakeholders’ objectives.

And finally, you must reiterate the company’s purpose, mission, and vision in your content marketing strategy, tying almost everything you publish back to those foundations.


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Image credits: Adobe Stock


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