An exit strategy is essential for businesses, especially in the current economic climate. In 2023, merger and acquisition (M&A) activity declined due to rising interest rates and uncertainty surrounding geopolitical events. So for 2024, Morgan Stanley Research predicts a 50% increase in deal volumes over the past year. Why the change? Morgan Stanley cited rising business confidence and positive global economic news.

Signs are that M&A activity is on the rise. In the first half of 2024, total global M&A deals are worth 425 billion dollars. And the volume of M&A activity grew 130% year-over-year in Q1 2024. While deciding whether to pursue an acquisition or a growth strategy depends on a company's goals, priorities and unique circumstances, acquisition is an attractive prospect for several reasons . Among them:

• A faster return on investment
• Freedom from the uncertainty and risks of trying to scale the company on your own
• Accelerated growth beyond what was possible as an independent entity
• Greater market appeal with access to a larger customer base, distribution channels and market presence

Getting to this level requires the right approach. Focusing on profitabilityby gaining market share and brand awareness, developing the right strategic partnerships, and creating maximum value for your customers through brand and customer loyalty, you can put your company in a very attractive position for potential acquisitions.

Before taking this step, it is important to understand the nuances of the language. The message that supports the purchase is very different from that used for sales or media relations. Acquisition messages should focus on market opportunities, intellectual property, differentiators, company vision, management team and proven market share.

Starting

There are many different forms of performance metrics to highlight the success and stability of your business, including market shareprofitability, strategic technology partner integrations, customer satisfaction, brand loyalty and share of voice.

Market share metrics can come from leading industry analysts. Analyst relations are an important aspect of an integrated marketing plan. Analysts provide quantitative and qualitative third-party validation; their metrics can help demonstrate traction and differentiators. You should constantly intersperse them in your messages.

Similar to market share is share of voice. This measures the visibility of earned media coverage in the competitive landscape and is important to demonstrate that your company is leading and shaping the industry conversation. Additionally, surveys can help you measure customer satisfaction and brand loyalty.

Joint marketing programs with strategic partners not only help to strengthen visibility, but can also be a channel for successful M&A. If you can show how your offering fills a gap in their portfolio and helps them compete and bring some deals to the table, you're putting your company on their buying radar.

Refine your messages, then work with experts. Start by having one clear message and ongoing communication across all marketing channels, including your website, media engagements, press releases, analyst relations, thought leadership and social media communications.

Then, you can start weaving in your experts. Cultivating champions with industry experts through a dedicated industry analyst relations program can positively impact market perception and help set the stage for a successful exit.

As mentioned earlier, analysts and others third party influencers are torchbearers who can validate your market share, support your technological differentiators, and demonstrate how your product or service is benefiting customers with credibility that goes beyond just saying it yourself. This includes third-party credibility for positive positioning in appropriate market research reports and the ongoing direct conversations they have with their customers every day about which vendors they should consider.

Your executive panel of company spokespersons plays a major role in getting your message out to market through paid, earned and owned media. This includes communicating your vision, your differentiators, your go-to-market strategy, your strategic partnership direction, and what sets you apart from other players in the industry.

Transparency is essential from the start. Don't underestimate the due diligence process. Be sure to address common pitfalls. Warning signs that warrant direct communication may include company finances, overall performance, customer and partner relations, employee retention, and legal issues.

Connected: How to effectively communicate and build positive perception during a merger or acquisition (and why it matters)

Start preparing now

An exit strategy should be part of your business plan from the start. With an end goal in mind, you can create a roadmap for how to get there. This helps crystallize your vision about the purpose and focus objectives for your business. You define success by providing an end goal that your team can work toward with a timeline and milestones.

Keep the trends in mind. Identifying and analyzing the big trends driving change and shaping the industry is essential for any business to stay ahead in an ever-evolving market landscape. These trends may include economic factors (such as inflation, interest rates, and GDP growth), regulatory factors, or environmental factors.

With a strong grasp of industry topics that drive customer adoption and venture capital or private equity funding, you can make informed decisions about where to focus your business strategy, product/service development, sales and marketing efforts .

An example of a recent trend was the increase in Cyber ​​security M&A and financing driven by the shift to telecommuting. Cybersecurity is a cornerstone of business continuity and resilience in today's digitally connected world. The cybersecurity landscape is experiencing significant growth in mergers and acquisitions.

Fifteen cybersecurity-related M&A deals, including several large transactions, were announced only in the first half of May 2024. Through M&A, these companies are consolidating to increase their security portfolio to provide more end-to-end solutions. This strengthens their market presence, helps them compete and attracts a wider customer base.

Connected: From Growth to Profitable Exit – Actionable Strategies While Selling Your Business

Leading the way to the exit

Leadership plays a key role in cultivating a company that is ripe for acquisition. Leaders, especially those within the technology space, must begin implementing strategies and tactics that make their organizations attractive to potential M&A opportunities. Focus on value creation and stay on top of industry trends; this includes evaluating reviews of other companies in your space. And remember that effective marketing communications are a cornerstone of M&A success. Work with internal and external experts to ensure your unique value proposition is clear and widely recognized.