Buyers are demanding greater growth in the companies they consider acquiring. Your company could have 85% profitability, but if your growth rate is anemic you will still probably get passed over for a company with aggressive growth. Below is a quick-and-dirty list of how buyers are viewing growth this year for both the growing-market niche and the mature-market niche.
Prime acquisition targets: History of minimum 200% annual growth rate.
May consider if desperate for a company in that niche: History of 50% to 200% annual growth rate.
Forget this dog: Growth rate below 50%.
Prime acquisition target: History of minimum 100% annual growth rate.
Maybe consider if desperate: History of 75% or greater annual growth rate.
Forget this dog: Growth rate below 75%.
Why the higher growth percentage for a dog in a mature market? It is so much harder to acquire more customers and sell more product in a mature market that the buyer cannot recoup the investment within the target time frame, usually five to seven years.
Marilyn J. Holt, CMC
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