How Conscious Companies Can Sell Without Selling Out
During the lifespan of most businesses, there comes a point in which the owner considers selling. Whether they want to reach a larger audience, secure additional resources or exit the company altogether, there are many reasons why an owner might look to sell their business.
For purpose-driven companies, their employees and their customers or clients, the decision to sell can feel especially devastating. Suddenly, the company’s culture, mission, vision and values seem uncertain or worse, at risk of being dismantled.
If executed thoughtfully, corporate transactions don’t have to feel like a direct threat to a business’ principles and standards — in other words: you can sell without selling out.
The term ‘selling out’ (or being called a ‘sell-out’) is by definition an insult — it is the questioning of one’s integrity, authenticity and morals. Historically, the phrase has most often been applied to musicians or artists who alter their material to satisfy a more commercially-appropriate or mainstream audience in exchange for monetary gain.
In business, the classic approach of finding a ‘strategic buyer’ can be considered selling out. A ‘strategic buyer’ is either a company competitor or a financial firm that is looking to strip assets, lay off workers, slash costs and quickly flip the company for profit.
Purpose-driven brands and conscious companies have become more and more attractive to consumers in recent years. A 2018 study from Cone & Porter Novelli found that 77 percent of buyers have a stronger connection to purpose-driven brands. And conventional acquisitions companies have taken note — mainstream conglomerates are eager to absorb these businesses.
When companies like Burt’s Bees, the makers of natural personal care products, was acquired by The Clorox Company, or the eco-friendly household product brand Seventh Generation, was purchased by Unilever in 2016, sell to larger firms they may have had to answer to concerned parties and disgruntled fans but there is also unmatched opportunity for additional capital to sustain growth, as well as a way to broadcast their values to a wider audience — and potentially even influence their new owners.
"We just think this is a perfect next stage for the expansion and reach of our mission," Seventh Generation CEO John Replogle said in an interview with CNNMoney. "This allows us to think much bigger and broader, to go from millions to reaching billions of consumers around the globe. This gives us a megaphone."
According to Burt’s Bees, since their acquisition, their operations are now completely carbon neutral, they haven’t contributed any manufacturing waste to landfills and they’ve been able to impact general practices at their parent company, too.
How to Sell Without Selling Out
So, how do conscious companies and purpose-driven entrepreneurs ensure that their ambitions don’t jeopardize their values? Consider the following to successfully sell without selling out.
Do Your Due Diligence
One of the most important actions to take when considering selling your business — and doing so without selling out — is to perform thorough research into prospective buyers. Determine which aspects of your business are non-negotiables and decide if these priorities are important enough to affect valuation.
Ask questions such as: does the acquirer have values consistent with your company? Are they willing to grow the business and take care of your employees? Would you be willing to accept a lower offer from a values-aligned capital partner?
Build Purpose Into Founding Organizational Documents
To ensure the most important aspects of your company remain intact after the sale, build company purpose into foundational documents like your articles of incorporation, operating agreement and corporate by-laws. Embedding company purpose into these documents can safeguard issues fundamental to the company’s DNA.
Work With a Purpose-Driven Investment Bank
One way for business owners to sell without selling out is to work with an investment bank that understands the principles of leading with purpose, like EPOCH Pi. As a B Corp investment bank, we use proprietary values and culture assessment tools as well as early integration planning to maximize value for our clients through a more holistic process.
At EPOCH Pi, we take a purpose-driven approach to each of our clients’ corporate transactions. By leading with company values, we can better identify philosophically-aligned parties and partners, enabling you to sell without selling out. Want to learn more about our process? Contact us for a free consultation!