Sweetview Partners, Inc.

Questions Buyers Ask: Who Buys What You Sell? (And How to Show Strategic Fit) ? <b>The Question:</b> "Who buys what you sell?" ?? <b>What Buyers Are Looking For:</b> Strategic buyers want to assess synergies between your customer base and their own. They're looking for cross-selling opportunities. ?? <b>Top 3 Tips for SMB Owners:</b> 1??<b>Customer Demographics:</b> Provide detailed customer profiles, including roles and industries. Don't just do this from feel, because you'll usually be wrong. Use the financials to see where both revenue and profit numbers fall for each customer. You'll find some surprises there. Example: "Our primary buyers are VPs of Sales and Marketing in the tech sector. Here's our customer segmentation analysis." 2??<b>Cross-Selling Opportunities:</b> Show how your product/service can be integrated into the buyer's offerings. Better yet, show how you've done cross selling with other products or services already, yours or others. Example: "Our software complements your CRM, allowing for seamless integration. Here's how we can cross-sell." 3??<b>Customer Loyalty</b>: Highlight customer retention rates and lifetime value. You can set yourself apart as an SMB seller by having these numbers figured out. Most owner/operators just operate the business by feel and don't put a lot of thought about these items. Example: "Our customer retention rate is 90%, with an average LTV of $5,000. Here's our customer loyalty program." ??<b>No thought and planning around your customers reduces valuations:</b> If you haven't segmented your customers to find the most profitable ones, your business will be underperforming. Unfortunately for a buyer, there is always a dip when some customers are removed because they either never were profitable in the end or the small profits weren't worth getting. Do this work now and you'll probably be able to pump up your profits - and your valuation - relatively quickly.

Questions Buyers Ask: Who Are the Critical Members of Your Team? (And How to Retain Them Post-Sale) ? <b>The Question:</b> "Who are the critical members of your team?" ?? <b>What Buyers Are Looking For:</b> Buyers want to understand the depth of your team and which members are essential for continued success. They're assessing the risk of key personnel leaving post-sale. They also want to know what skills will be leaving when you sell (yours!) and how well the whole will hold together once you're gone. ?? <b>Top 3 Tips for SMB Owners:</b> 1??<b>Key Person Documentation:</b> Identify key personnel and their roles, responsibilities, and contributions. Emphasize longevity of service, indicating that they are likely to stick with the company. Example: "Our CTO, Jane, has developed our core technology and is critical for R&D. Here's her detailed role description." 2??<b>Retention Plans:</b> Outline plans to retain key employees post-sale. Show how your existing compensation plans have rewarded key employees who perform at a high rate. Also key is whether your comp plans have kept up with the market. Example: "We have retention bonuses and equity incentives in place for our top performers. Here's our retention strategy." 3??<b>Succession Planning:</b> Show how you've prepared for leadership transitions. Most small companies have no succession plan at all. Which means the employees have no idea what the future holds for them, either. Example: "We've implemented a mentorship program to ensure knowledge transfer. Here's our succession plan." ?? <b>No Plans, Structures, or Job Descriptions are a Huge Red Flag:</b> If you have spent the last 20 years running your company without any structures in place to train, improve, and retain talent, it is a giant risk factor for any buyer.

Questions Buyers Ask: What's Your Market Penetration Rate? (And How to Show Growth Potential) ? <b>The Question:</b>"What is your market penetration rate?" ?? <b>What Buyers Are Looking For:</b>Buyers want to understand the potential market size and how much of it remains untapped. Most small businesses have a geographic definition of "market", so they are also testing your knowledge of everything going on in your market. How much competition is there? How do you compare? Where are you in the price range in the market? ?? <b>Top 3 Tips for SMB Owners:</b> 1?? <b>Market Research:</b> Provide data on your total addressable market (TAM) and your current market share. The research is available for just about any industry and geography and even if you've never looked at it before, having the data makes a difference. Example: "Our market for painting services in the Greater Houston Area is roughly $100M, and we currently have a 1% market share. About 60% of the market is controlled by super-cheap, poor-quality, giant providers and there are a bunch of us small businesses taking care of the rest." 2?? <b>Growth Projections:</b> Show how you plan to increase market penetration. Example: "We project a 10% increase in market share over the next 3 years through new product lines." Give examples of what you're going to do (or - even better - have started to do), why, and why you expect that you will experience growth in that new market. 3?? <b>Competitive Analysis:</b> Highlight your competitive advantages that will help you capture more market share. How are you different from your competitors? What do your customers say that you do better? Example: "Our proprietary technology gives us a 20% cost advantage over competitors." It may surprise you, but even though your business is healthy and growing, not knowing what is going on in your market will reduce the value of your business because it's not tuned into the things that can make it grow.

Question Buyers Ask: What's Your Cost Per New Customer Acquired? (And How to Impress Buyers) ? The Question: "What is your cost per new customer acquired?" ?? What Buyers Are Looking For: Buyers want to know if you have a predictable, economical, and scalable formula for customer acquisition. They're assessing the efficiency of your marketing and sales efforts. ?? Top 3 Tips for SMB Owners: ?Document Your Formula: Show a clear, repeatable process for acquiring customers. Example: "Our marketing funnel converts at 5% with an average cost of $100 per customer. Here's our detailed customer acquisition strategy." ?Highlight Efficiency: Demonstrate how you've optimized your customer acquisition costs over time. Example: "We reduced our CAC by 20% through targeted social media ads and a referral program with a 30% conversion rate." ?Scalability: Prove your model can scale without a proportional increase in costs. Example: "Our referral program has a 30% conversion rate, making it highly scalable. We project a 10% increase in market share over the next 3 years through this channel." ?? What if you don't know your sales numbers? Most small businesses that aren't ecommerce haven't really tracked or learned their sales numbers. This can be a major factor for your valuation and, if you have some good time before you're ready to sell, can be some of the best time and money you'll spend in tracking.

Questions Buyers Ask: Why Do You Want to Sell Your Business? (And How to Answer Like a Pro) ? The Question: "Why do you want to sell your business?" ?? What Buyers Are Looking For: Buyers want to understand your motivation for selling. If your business has a bright future, they'll wonder why you're not holding onto it. They're looking for signs of strategic fit, personal timing, or market conditions that make now the right time to sell. ?? Top 3 Tips for SMB Owners ? Personal Timing: Highlight personal reasons like retirement, health, or pursuing new ventures. Example: "I'm ready to retire and enjoy the fruits of my labor. I've built a strong team that can continue the business's success. ? Market Conditions: Explain how current market conditions make it an opportune time to sell. Example: "The market is ripe for a sale, with high demand for businesses like ours. We've seen a 15% increase in industry valuations over the past year." ? Strategic Fit: If applicable, mention how the buyer's strategic goals align with your business. Example: "Your company's focus on [industry] aligns perfectly with our growth trajectory. We've developed proprietary technology that would enhance your product offerings." ?? What Happens if You're Not Transparent: Buyer Distrust: If you're evasive or unclear about your reasons for selling, buyers may question your honesty, leading to a breakdown in trust. Valuation: Lack of transparency can lead to lower offers as buyers factor in perceived risk Deal Delays: Buyers might conduct more due diligence, causing delays or even deal termination if they uncover undisclosed issues. In the end, there are plenty of reasons that you're considering selling your company and all of them are invalid. Once a buyer senses that you're not being honest, the relationship changes and they start to wonder what else you might not be honest about.

Rocket Buys Redfin for $1.75B: What SMBs Can Learn from This Real Estate Power Play Rocket Companies is acquiring Redfin in an all-stock deal valued at $1.75 billion, representing a price-to-revenue ratio of 1.68x and an amazing price-to-EBITDA multiple of 66x (based on Redfin’s 2024 adjusted EBITDA of $26.5M). Let’s break down what this deal means for the industry—and what small business owners can learn from it. ? The Numbers Behind the Deal Rocket’s offer values Redfin shares at $12.50 each, a 63% premium over its recent average price. Here’s the math: Revenue (2024): $1.043B → Price-to-Revenue = 1.68x Adjusted EBITDA (2024): $26.5M → Price-to-EBITDA = 66x ?? Lesson for SMBs: Buyers pay premiums for strategic synergies, not just financial performance. Redfin’s integration with Rocket’s mortgage platform creates cross-selling opportunities that justify high multiples. ? Why Rocket Made the Move Rocket aims to create a seamless home-buying experience by integrating Redfin’s real estate listings with its mortgage services, leveraging AI and data insights from over 100 million properties. ?? Lesson for SMBs: Position your business as a “missing puzzle piece” in a buyer’s ecosystem. Rocket isn’t buying Redfin just for its revenue—it’s buying the synergy between real estate and lending. ? Redfin’s Challenges Despite revenue growth (+7% YoY), Redfin struggled with profitability, posting a net loss of $164.8M in 2024. Its stock plummeted from an all-time high of $96 in 2021 to below $10 before the acquisition announcement. ?? Lesson for SMBs: Timing matters. If your business faces declining growth or profitability, consider selling before market sentiment erodes your valuation. ? The Vision Rocket expects $200M in synergies by 2027, including $140M in cost savings and $60M in new revenue streams across real estate brokerage, mortgage origination, and title services. ?? Lesson for SMBs: Buyers love efficiency plays. Document how your business can reduce costs or unlock new revenue streams for potential acquirers. Follow us for expert insights on maximizing your business valuation—or visit https://lnkd.in/gi4Q6JPq to start planning your exit today.

If you operate a small business and expect to ever sell it, you need to understand 23 & Me's problems. Once upon a time, 23 & Me was a hig-flying media darling of a company worth $6 billion. Today, it is at around 15% of that and falling. Same business. Same product. 85% less value. What are the problems they are having? ?? Single Use Product - As wonderful as it is to know where your ancestors came from or what diseases they may have left you vulnerable for, once you know, you know. They have no follow-on products or services, so they have to *continually* win new customers. That is a worse business environment than a company that repeatedly charges happy customers for years. ?????? - VALUATION PRO-TIP: Always have something else to sell your customer. Best case, it is a related product or service from your company. But even selling someone else's product or service for a cut of that sale is better than throwing away all of the money it took to gain that customer with a single use product! ?? Single Back End Sale - 23 & Me doesn't just sell you information about your genome, it sells your genome to other companies. Scientific research was desperate for genetic models when 23 & me started and they made plenty of money selling your information to them. But now the world is awash in genetic information and that similar one-time sales business model isn't worth so much any more. And, as a result, neither is the company. ?????? - VALUATION PRO-TIP: There is no such thing as "level sales". Inflation is always at work. If you've done $1 million in sales for the latest 5 years, you've actually done a little less every year (much more in the COVID years). Your company must always be growing the top line at a steady margin so that your bottom line isn't actually shrinking due to inflation. ?? Fast Growth Ends - Every company that is steadily growing is worth more than a company that is steadily shrinking or even just maintaining similar sales. That makes sense, right? If a company has several years worth of growth, the logical conclusion (whether right or wrong) is that it'll continue. So if I buy your rising company today, it'll still at least try to continue rising tomorrow. Fast growth periods are impossible to maintain forever. They will always stop and, unless you've got another trick up your sleeve, your valuation will immediately start to fall. Just ask Peloton or just about any gym; fitness equipment manufacturer, or outdoors retailer post-COVID. ?????? - VALUATION PRO-TIP: You will buy a decade or more if you sell your company during the second or third year into a Fast Growth Cycle. The reason? After the cycle, your company valuation will continue to decline for a number of years before you can turn it around and make another steady growth cycle. For small busine... https://lnkd.in/g6G_HEsu

What can SMB owners – particularly those thinking about selling in the next few years -learn from this O&G-focused software company’s $2.4B Acquisition? Private equity giant Francisco Partners has agreed to acquire energy software leader Quorum from Thoma Bravo in a deal reportedly worth $2.4 billion. This transaction offers valuable insights for small business owners considering their own exit strategies or growth trajectories. The Deal at a Glance ? Transaction Overview Francisco Partners announced on March 4, 2025, that it would acquire Houston-based Quorum Software, a leading provider of energy software worldwide that serves over 1,500 customers across 50 energy-producing countries. ?? The reported value of approximately $2.4 billion (including debt) demonstrates the premium valuations available for specialized software companies with dominant industry positions. The same holds true for any small business – the more focused on a specialty, the greater the value. ? Quorum's Market Position Quorum has spent over 20 years establishing itself as a critical software provider for digital transformation across the energy industry's upstream, midstream, and downstream sectors. ?? This acquisition highlights how developing deep industry expertise in a specific vertical market can make your business significantly more attractive to strategic buyers. Consider how your SMB can deepen its specialization rather than broadening too thinly. Why this transaction at this time? ? Energy Transition Opportunities Francisco Partners clearly views Quorum as strategically positioned to capitalize on momentum in global energy markets and increased demand for its platform. ?? For small business owners, this signals the importance of positioning your company at the intersection of traditional industries and digital transformation. Buyers are willing to pay premiums for businesses that help traditional sectors modernize their operations. ? Long-Term Growth Strategy The PE firm has explicitly stated its intention to grow Quorum's platform and customer base through both organic investment and strategic acquisitions. ?? This "platform play" approach is increasingly common in private equity. Small business owners should consider whether they could position their company either as a potential platform or as an attractive bolt-on acquisition for an existing platform. Analyze the Investment Pattern ? Tech-Focused Investment Strategy Francisco Partners manages approximately $45-50 billion in capital and has invested in more than 450 technology companies since its founding in 1999. ?? The firm's focused investment strategy illustrates how specialized buyers often pay higher premiums. When planning your exit, research potential acquirers who specifically focus on your industry rather than generalist buyers. ? Secondary Buyout Dynamics This deal represents a "secondary buyout," where one private equity firm sells to another... https://lnkd.in/g_zXvAAm

Looking for a simple way to grow your business? In many industries, the answer is as simple as actually answering the phone and with a friendly, helpful person. Most small businesses have no idea how many calls they're missing. And across many consumer-facing companies, the competition is just as bad. Simple growth research for this week: ?? Look up how many incoming calls to your business are actually answered. If you have the ability to track drops (customer hangups while waiting on hold, for instance), even better. ?? Your phone system may already be tracking this informstiom and you don't know it. Most IP-based phone services have this feature - check with your provider. If not, do a search for "cloud contact center" and you'll find a ton of good options. ?? Now do some research on your competitors and see who is answering the phone, returning calls, and providing pricing / quotes. And how long all of that takes. ?? This is a perfect job for a VA or, if you have the skills, AI. Give them a simple job to price / quote and note the time called, the result, the callback time, and the price quote. For those that provided pricing, you'll also have an idea of where the priceline is for your industry locally. You may be surprised and how wide the range is. ?? Now you know what your company and the local industry looks like to customers. Is it a friendly picture? In 2025, usually the answer is no. ?? There is money to be made in just answering the phone and being able to give a fast price quote. In fact, you could win business in a lot of industries by advertising, "We answer our phones every time and provide a quote for standard jobs within 1 hour." Really confident in your people? Add, "Most jobs can be completed within 1 day / week / month (whatever makes sense for your service and industry)" Note that we didn't mention a price because, for many people, the problem solved now is worth paying more for. People spend $5 for a bottle of water (or mostly water) at a convenience store for a reason. https://lnkd.in/g8neJE6j

Does Your Business Have "Curb Appeal" for Buyers? (3 Steps to Sell Faster, For More) Imagine selling your house, but the lawn's a mess and the roof leaks. Buyers run screaming. Same goes for your business. Let's boost your "curb appeal" BEFORE you sell: ? 1. Fix Your Leaky Faucets (HR Edition) Still running HR "on a handshake"? Buyers see an employee lawsuit waiting to happen. ??Action: Get legit. Written policies banning harassment, offer letters for every hire, and bonus plans are table stakes. One Texas construction client got dinged $500K on valuation for sloppy HR docs. Your valuation will suffer more if you have no HR docs, no Employee Handbook, and no Data Policy (what is "Confidential", what is "Trade Secrets", etc.). ? 2. Assemble Your Binder (Your Biz Bible) Buyers want to know how you run things. Document everything: ?? Opening/closing checklists ??? Customer onboarding flows ?? Emergency contacts ?? Action: Create a "Biz Operating Manual." Think appliance manuals for your company. How does each position / process work? Imagine that you're creating a manual for a General Manager to run your company. But he can't ever ask you questions. This has the extra bonus of preparing your company for a General Manager, which will benefit you whether you sell (and include this person who is trained in keeping everything running) or not (and have someone to take on a lot of your functions so that you can take it easier) ? 3. Document Your Intangibles (Your Secret Sauce) Buyers pay EXTRA for unique value—if you can prove it: ?? Proprietary research ?? Customer acquisition formulas ?? Location selection criteria ?? Action: Map your "secret sauce." Step one: know how you're different from other companies in your industry. Most small business owners can't articulate this. Once you know, document the heck out of those small differences that translate into big money. Need some help accomplishing these and other critical items to prepare your business for sale? Sweetview Partners performs exit consulting - helping you do just the things we do on our own acquisitions to improve their valuation. Drop us a message and let's talk about how this can work for you.