Making the pitch
To most people, patience is a virtue. DeBenedictis says when growing a business, it’s a necessity.
Acquisitions seldom come together overnight, and while you need to have the initiative to spur growth, you also need to have the ability to let the process run its course.
It can be much easier said than done, especially when dealing with a large, bureaucratic organization where items might have to be considered by multiple executives and boards, increasing the probability of business getting hung up in the corporate and governmental channels.
DeBenedictis says a CEO must learn to control the urge to force things.
“I think you get frustrated because you are not in control,” he says. “Especially with government, it’s not like a deal where you’ve offered so much per share, and the shareholders either have to vote it up or down. There is no public reason why a city has to sell its water system to us. They can sell when they want to sell.”
DeBenedictis says in many cases, the only ammunition a CEO has in making an acquisition is repeating and modifying the initial purchase pitch. Since a business leader can’t force an entity to sell, the only thing he or she really can do is have the company’s senior managers keep reiterating the advantages of selling to the decision-makers. It’s a one-pronged approach that doesn’t guarantee expeditious success, but in the end, it can work.
Business leaders should also be aware of what selling points their business has that other businesses don’t. In most cases, it’s a matter of research, comparing your business to others in the industry. In the case of Aqua America, it has the advantage of providing a vital service.
“We realize the service we provide is vital to your well-being,” DeBenedictis says. “You want to know that when a fire starts, there will be enough water pressure to put the fire out.”
But even with all the selling points Aqua America officials can piece together, the purchase process might still ultimately become a waiting game as private owners and government leaders mull over the proposal with no reason to move on it.
DeBenedictis calls it a “value-destroying period” for the acquisition candidate, and says a CEO’s ability to stay focused on the final goal of making the acquisition will be tested during a long wait when little is accomplished.
“Our acquisitions can take nine to 12 months, and that’s a very value-destroying period, especially if you are selling the company,” he says. “You know what happens when a company is changing. It gets even more intense when you’re being sold and you don’t know what the vision is going to be or you don’t know who your new boss is.
“You spend more time speculating around the water cooler than working. That’s why it can be a value-destroying period, and that’s just something you can’t get around.”