All businesses eventually sell or close. Whether it’s by retirement, generational transfers, in good times or bad, 100% of business entities will change hands during or shortly after the lifetime of the owner. Those owners who plan and strategize for an exit are far more likely to achieve higher value and leave the business in their preferred place than those with no plan.
In this 3-part series, we will discover what’s in a solid exit plan and how to begin writing it. Also, we will discuss the types of exits, types of buyers, and how maximum value is achieved. The last part of the series will be devoted to a Q&A from your input, so be sure to reply with any questions or comments you may have.
The first question every owner asks when considering and exit is, “How much is my call center worth?”. While this is a very reasonable and understandable question, it’s first important to discuss the current state of Mergers and Acquisitions of call centers / BPOs and how that will impact your future sale.
Currently, with the price of capital being at historic lows and private investments (private equity) dollars at record levels, the demand for acquisitions for profitable businesses is very high. In the call center / BPO arena, the prices and terms of exit have never been more favorable to call center owners. Lower technological hurdles, far reduced cost of telephony and long distance, and a business environment favorable to outsourcing have lifted the barriers to entry on the marketplace, increasing demand for acquisitions, roll-ups, and consolidations.
Currently, many more exits we see are predominantly in cash, with additional portions in stock, earn-outs, and seller notes. Additionally, the multiples by which call centers are priced have increased along with the corresponding increased demand. In Part 2 we will discuss value further, but in short, demand is at its highest and exit parameters along with pricing are at their best.
So, understanding that there is an owner-friendly marketplace, and to answer that question of “How much is my call center worth?”, it’s first important to understand the owner’s exit goals. Why are they selling? Where do they want the business to land? Is it important to keep key personnel after the sale? Do they want more of a cash structure or would they entertain stock, earn-outs, or seller notes? Do they want to stay on after the sale and have another bite of the apple down the road? Are there key clients and contracts that need to be maintained after the close? Do I have a buyer picked out?
Once those questions are answered, an exit strategy and a buyer profile is designed to achieve the desired result. After that, it comes down to the health of the business, a detailed accounting analysis, a strong offering memorandum, and serious negotiating in order to execute a proper exit strategy that maximizes the price and value of an exit.
In Part 2 of the series, we’ll take a deeper dive into the specifics of determining the pricing for a call center/BPO.