I have no doubt you are all familiar with the analogy rich or royal, it basically translates that company founders are either in it for the money – rich; or to build a lifestyle and personal identity – royal. This has to be a decision made from start up as your actions have to be consistent which ever road you choose, usually the royal tactics don’t mix too well with the rich goals.
Sure we are all in it for money and profit should be the golden rule behind every choice we make. I have no doubt very few business owners would say no to a very lucrative acquisition or takeover offer. The value of most businesses can in a large degree be valued in its attractiveness to be bought or taken over. So in reality our subliminal end goal is always acquisition.
The best way to get yourself acquired is to be profitable. Profits prove the business is operating well. Profits validate the market. Profits make minimum valuation easy. Profits mean the buyer converts balance-sheet money into bottom-line profit-and-loss money — a trade every acquiring company wants to make.
Profits mean you don’t need to sell, it allows you the ability or freedom to walk away from a deal. You have little negotiating power in any deal unless you can happily walk away.
Of course it is ego-inflating to run your own company. It’s cool at functions or parties to say “I run my own company.” So although the goal is rich, your company ethic and standing is royal. In short acting like “Royal” means building a long-term, sustainable business, and that’s exactly the kind of business that gets acquired.
One of my favourite quotes is by Roy T.Bennett: “You are not rich until you have a rich heart”
