Three priorities to preserve value for the upturn

Two recent reports have got analysts poring over the prospects for M&A this year and looking back over the entrails of 2008. The graphs and charts make interesting reading, but three simple priorities are all it takes to prepare your business for the upturn, writes Rose Lewis.

Like cricket buffs notching up the averages at the end of a season, you just can't keep an analyst with an empty spreadsheet quiet at year's end. End of Play for 2008 showed a distinctly sticky wicket for traditional media Mergers and Acquisitions, according to the Jordan, Edministon Group. Their tally of M&A deals shows traditional media visibly losing value and, frankly, getting bowled out by anything digital.

Working with businesses that want to build value for exit, as we often do at Pembridge, we see the same pattern. For example, here in the UK we have had two calls this week from Regional Development Agencies whose weaker independent TV producers have called 'emergency meetings' as they see their sector getting wiped out. In both cases the callers wanted to know - is it just us?

Sad to say, the answer is no. It's just very, very tough right now for traditional media businesses worldwide and our advice to both callers was: now is the time for tough love. Don't throw good money after bad propping up broken business models and instead, do everything you can to push those entrepreneurs who are finding genuinely innovative ways to monetise content. We say that with some confidence because several of the digital businesses on our slate have more work than they can handle.

The spreadsheet jockeys at Admedia Partners have also been picking over 2008. I'll leave anyone interested to follow up the detailed stats and simply observe that research suggests that, despite the discouraging economic climate, 60% of Admedia's respondents expect to take one or more M&A related steps in 2009.

So what does it all mean for those of us in the business of building companies rather than buying them or picking over the bones of done deals? I reckon three simple priorities stand out for anyone who's serious about trying to thrive once this economic winter ends:

1. Chalk up a profit. In a down-turn, it is much easier to control costs than it is to control the top line. So slash what you have to cut. Just do it. Make sure your bottom line is black - it doesn't have to be huge - but DO make some money.

2. Buck the trend on revenue. When folk like Sir Martin Sorrell are predicting falling revenues, just make sure you sustain revenues. 'Flat is the new growth' for this season, frankly.

3. Win some new business. If you can prove you can reel in some new clients, even in a tough market, you have real validation for your offer. It doesn't need to be mega-business - just show that there are people out there who still love what you offer.

The reason we say preparation for a business exit starts several years ahead is because the track record you show now is what due diligence and valuation will finally be based upon when time comes to push the 'sell' button. You need the right evidence on record to tell a good story in the future.

Quietly, without shouting about it, people like you are positioning themselves for the upturn. Hang in there. You can do this too.